Sectoral headwinds, automation plague IT sector’s hiring prospects

Indian IT companies need to produce more jobs and a 70-hour week will not just be a hurdle in creating more opportunities for prospective IT professionals but also counter-productive for a company’s own growth 

Domestic IT sector, one of the largest white-collar job-creators in India, witnessed shrinking in hiring during the August-September quarter. This is unprecedented in over two decades with headcounts getting lower than the previous quarter. While we know that the hirings have suffered because of headwinds, largely on account of companies cutting their IT spends, the challenge is also on how IT services industry is evolving in the event of technologies like AI (artificial intelligence), automating the industry, which itself creates solution for others to automate and improve their operations.

According to reports, country’s top nine IT services companies have witnessed a combined decline in quarter-on-quarter (QoQ) headcounts by over 50,000 in the three months period gone by. The trend rings an alarm bell as tier-1 companies Tata Consultancy Services (TCS), Infosys, HCL Technologies, Wipro, LTIMindtree and Tech Mahindra have all seen their employee count going down.

Infosys handed over highest number of pink slips at 7,500 on the QoQ basis while taking the tally to over 16,400 on the year-on-year basis. Its headcount at the end of September quarter was 328,764 according to company’s filing to the stock exchanges. Next was Indian IT bellwether TCS which reported over 6,300 people losing their jobs. TCS’ workforce stood at 608,985 as on September 30th.

TCS attributed this to the company’s growing focus on improving workforce utilisation and productivity. HCL reported a total headcount of 221,139 which was lower by 2,299 on the QoQ basis. Others including Wipro, LTIMindtree and Tech Mahindra also fired several thousand professionals among themselves.

While these companies significantly reduced their attrition rate bringing it between 11 per cent (Tech Mahindra lowest among its tier-1 peers) and LTIMindtree (15.2 per cent highest) over the June quarter and corresponding quarter of the last financial year, the phenomenon could be attributed to the fact that many professionals would be wanting to stay in their respective companies and see through this period until things improve for them and the sector as a whole.

The IT spends by companies in developed economies and disruptions in the form of new cutting edge technologies remain two biggest variables which will determine how not just the IT companies hire but also those companies which rely heavily on IT services and solutions.

Inflation has been a problem that has weighed on the global economies over the last one year and which triggered rate hikes by the central banks of all economies. This has been one of the biggest reasons why global tech companies, especially in the US and Europe started laying-off employees to cut costs. That impact percolated to India as the Indian IT companies have a significant business stake in global IT exports.

The world is also witnessing two wars — the first started with Russia-Ukraine and which is still ongoing, the latest regional conflict has started between Israel and Hamas following the killings of Israeli civilians. The conflict is only ballooning and has the potential to go awry if the situation escalates between the West and gulf nations.          
It cannot be said in absolute surety when things would come back on track on inflation front and on geo-political front.

The situation becomes precarious for India considering the number of people that add to the workforce every year. This is not just a problem for the graduates but also a problem for the central and the state governments. No matter how many jobs governments generate in the public sector, it cannot take the space of private companies in terms of job creation.

Moreover, engineering and IT related jobs are one of the most sought-after ones by professionals who study engineering and IT. This results in millions of engineering/IT graduates passing out every year.

Are we producing enough jobs every year to employ all? The answer is no.

Also, the industry itself has raised concerns over the quality of pass outs. So, there is a big divide between what companies are looking for and what the graduates have to offer.

One of the revelations this year was the introduction of ChatGPT which created a debate if machines would replace humans in many areas of work across all walks of life. We are hearing industries after industries adopting various AI tools like the ChatGPT to bring efficiencies to their work. The technology is only getting better and we are seeing people using this tool to make presentations, in excel sheets, writing scripts and thesis etc.

The institutions and governments will have to be ahead of the curve to be in this game or there is a danger of them falling way back in giving students what is needed. While the governments have to bring policies that enable the ecosystem for such education, the institutions will have to adopt and implement it.

Lately, two more developments have made the headlines. One may not be as big and which is that companies and even the IT sector ones are now stressing on the need to bring employees more often to the offices. Hardly a year back, we were hearing of work without office narrative which was followed by a hybrid model and now a different realty looming large.

In between, there were talks of practices like moonlighting, which again created a divide among people who were in favours of it and those against it. There are arguments which are equally in favour and against it. But one thing is for sure that issues/challenges are surfacing at a very fast pace and they are bound to create extreme reactions.

While companies are rightly sceptical about productivity going down and resources running danger of being misused, the employees’ concerns of getting laid-off and keeping an alternate channel of income open, are not unfounded.        

But the biggest talking points over that past one week has been Infosys founder Narayan Murthy’s statement of 70-hour work week which translates in to 10-hour shift in a week with no-off.

While people from the business fraternity have jumped into the debate with many backing this move but this idea is being criticised with a higher zeal.

The idea is problematic on several counts. One, there are several researches and empirical evidences that show that there is no direct link between working for long hours and achieving productivity. Moreover, there are studies which have proved otherwise. Many reports have also pointed out flaws in Murthy’s assertions.

Secondly, there is now an attempt in many countries to lessen the working hours to ensure people have a higher work-life balance and in India we are arguing in favour of increasing working hours.

Thirdly, work is one part of the responsibilities for a professional and he/she may have other equally important obligations to shoulder, and it would be impossible to devote so much time to the job.

Fourthly, while we know that IT companies are better paymaster than many sectors, are the salaries of these IT professionals remunerative according to their skills and aptitude.

Lastly, but the most important thing is that will a country become more productive by sacrificing the workforce’s health and mental wellbeing? Are the IT companies ready to offer job security to these professionals and not hand them pink slips if their revenues fall or profits shrink or in the name of staff optimisation? 

The need of the hour is to impart skills that make engineers and IT professionals employable. The necessity is also to increase opportunities for more people to find jobs and not to create a system where one is expected to work 70 hours a week. Mr. Murthy has made an IT behemoth in Infosys and that has created opportunities for millions of people over the years to not just earn their living but make a niche for themselves.

it’s time Indian IT companies can afford to leap into the future. 

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