31-year-old Aakash recounts the day sometime in late 2023 when he got an email from a manager and a HR executive asking him to join a virtual meeting.
It lasted for 15-20 minutes and ended up being a Hobson's choice.
He was given two options by his firm, Teradata, a cloud analytics and data platform; he would either be terminated with a lower payout, or he could choose to resign voluntarily and take home four months of salary.
“When I asked if I could get some time to decide, they said I had to inform them during the meeting itself. I quickly spoke to my cousin and decided to opt for the resignation,” Aakash told Moneycontrol.
It’s been four-five months since then and Aakash has appeared for at least 20-25 interviews, to no avail. “It has been tough to find a new job in the current market environment; chances of salary negotiation don’t exist. My severance pay funds are also drying up in expenditure. I am now somewhat dependent on my parents,” he said.
Sriram and some of his colleagues had spent 25 days on the bench in Cognizant after one of the global IT services giant’s clients decided not to renew their contract a few months ago. The company tried finding other projects to deploy Sriram, but on not finding any he was asked to resign and was given three months of his salary as severance pay.
Employees across experience levels were also asked to resign in silent layoffs at Cognizant in recent months.
Aakash and Sriram are just two names among several thousand IT services employees who were let go between 2023 and 2024 amid a tough demand environment for the industry.
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Silent layoffs
According to data shared by the All India IT & ITeS Employees' Union (AIITEU), around 20,000 techies lost their jobs in ‘silent’ layoffs in the IT/ITeS sector in India in calendar year 2023. AIITEU believes that the actual number is higher and yet to be reported. These layoffs happened across IT services companies of all sizes.
The most common way to do a silent layoff is to give an employee 30 days to find a new role within the same company. If the employee can't, then s/he is asked to leave.
Silent layoffs have been a common practice among many firms to let go of employees, wherein they are compelled to resign in a discreet manner.
In 2024 alone and just among the top India IT services companies, about 2,000-3,000 professionals lost their jobs, according to IT employee union Nascent Information Technology Employees Senate (NITES).
The stigma of termination
“There are multiple ways in which companies are removing employees, and those who resist will be terminated (immediately). Once your relieving letter marks you as “terminated”, then it becomes very difficult for that person to find another job,” said Harpreet Singh Saluja, president, NITES.
Employees are also made to sign non-disclosure agreements (NDAs), in some cases, to get their full payout, said Saubhik Bhattacharya, General Secretary, AIITEU.
According to Bhattacharya, it doesn't end with downsizing teams; existing employees are now being made to work for 14-16 hours each day, compared to 10-12 hours a couple of years back.
“We are observing this across all companies. With the intention to downsize and improve profit margins, companies are increasing the number of hours each employee works,” Bhattacharya told Moneycontrol.
Also read: Technology services firms to see over $20 billion in deal renewals in FY25
A wide trend
These layoffs are happening irrespective of the size of the companies.
Teradata, which is a San Diego-headquartered cloud analytics and data platform company, laid off about 35-40 employees from its Hyderabad campus at the end of last year. This came after the company had previously let go of about 1,100 employees globally, including in India, in 2022, sources in the know told Moneycontrol. Going by its employee base numbers on LinkedIn, Teradata has over 10,000 employees globally.
Boston-headquartered financial services company State Street took over joint venture partner and technology service provider Atos Syntel’s operations in India last year. As per sources, around 400-500 employees were let go in India in March 2024 as a part of streamlining operations.
Several employees and industry sources told Moneycontrol that this is also happening across Accenture, Cognizant, and Infosys.
In fact, multiple sources said that Infosys has laid off nearly 200-500 employees across campuses in 2024, though this has been done by asking them to resign voluntarily.
Both Infosys and Atos Group denied laying off employees.
In a statement, Shaji Mathew, Group Head, Human Resource Development, Infosys, said, “We would like to clarify that there have been no layoffs at Infosys. As an organization, we have consistently focused on high performance and exemplary work ethics. We are continuously investing and reskilling our employees for seamless career transitions, with an aim to enable all our employees to stay qualified and proficient in an increasingly AI-powered global industry ecosystem.”
A spokesperson for Atos Group said, “The Atos Group in India has not implemented any large-scale redundancies during the current year. Please note that State Street took full ownership of its joint venture with the Atos Group (State Street Syntel Services Pvt. Ltd.) in 2023.”
“This is a normal course of business for a global organization, which sometimes means re-aligning our people to our priorities. We do not take these actions lightly and treat any departure with utmost respect and support,” a Teradata spokesperson said, in response to Moneycontrol’s queries.
The spokesperson added, “Teradata is focused on sustaining profitable growth, while remaining agile, and investing wisely. We are a company that competes in a dynamic market, and as technologies evolve and the market shifts, we occasionally adjust our organization to retain and advance our position.”
Accenture, Cognizant, and State Street had not responded to queries sent by Moneycontrol at the time the article was published. The article will be updated to reflect the companies' views as and when they respond.
Record high job losses
Industry experts called this among the record-high layoff years since the financial crisis of 2007-2008.
Yugal Joshi, leader - technology services research, at management consulting firm Everest Group, says challenging macroeconomic scenarios played spoilsport back then, too. "All of them promised to maintain or increase operating margin and for a service company, beyond people reduction, there are not many credible levers. They have maxed out their offshoring and pyramid rationalisation and must hire nearshore and onshore, so for them, this is one of the best resorts.”
Experts expressed concern about certain service providers trimming their smaller-sized clients because once they lose clients, they rarely get them back.
“They started trimming their long tail and then what do you do with that? You can’t redeploy all of them. You will have to let them go,” Joshi said.
Modus Operandi
Saluja explained that this is not a mass layoff but a structured one, and if a particular IT services company wants to lay off 1,000 employees, they will do it in stages. Each month, they will let go of 10 to 20 employees from different offices in various cities. This process will last for three months, and because it's spread out, it will not attract much attention.
This was also reflected in the trend in overall headcount decline for the top five Indian IT services companies for financial year 2024. The five companies are Tata Consultancy Services (TCS), Infosys, HCLTech, Wipro, and Tech Mahindra.
Together they lost around 69,167 employees in FY24, amidst an uncertain demand environment, delays in deal ramp-ups, and cancellations. For some like TCS and Infosys, the full-year headcount plunged for the first time in two decades.
“The top five companies' combined headcount declined in the previous quarter. A good part of it is silent layoffs, which is around performance management and other things,” said Joshi.
Joshi says IT services companies have been laying off employees for some time now but this time it might be higher than usual due to a plethora of reasons. They may vary from macroeconomic uncertainty to the impact on productivity due to artificial intelligence (AI).
Experts say Indian heritage IT services providers have changed their operating models, wherein they want to make every technical person a billable resource. A billable resource means an employee who has been deployed in some or other project, wherein a client pays for the work she/he does.
“Many people, even at the middle level are carrying some sort of influence or tagged revenue number, and that is creating a problem because not everybody wants to do that. And of course, if they don’t do it, it’s the way out,” said Joshi.
(Names of employees have been changed to protect their identities.)
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