Where Have All the Jobs Gone?

New tech may see more jobs lost than created in the short term, while IT sector undergoes a never-before churn
Where Have All the Jobs Gone?
Photograph by Alamy
Where Have All the Jobs Gone?
outlookindia.com
2017-10-14T11:01:03+0530

There has been a spike in IT professionals knocking on the doors of labour commissioners, asking them to intervene in ­cases of alleged “wrongful” ret­renchment or lay-offs. “A rec­ent response by a labour commissioner in Pune to a query filed under the Right to Information Act revealed that 22 of the 25 petitions in the past 10 years were filed this year alone,” says Ela­varasan Raja, general secretary of ­Forum of IT Employees (FITE), Maharashtra. The forum, which provides support to affected IT workers, has seen the number of petitions by affec­ted individuals rising not just in Pune, but in most IT hubs, including Bangalore and Chennai. Tech Mahindra, Vodafone, Syntel, Wipro, Capgemini, Technosoft, JP Morgan, HTC Global, CTS and HP Enterprise are among companies against whom petitions have been filed so far.

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“Across India, more than 30,000 emp­loyees have been retrenched so far this year,” says Raja, alleging that IT companies don’t always reveal the number of people who have been handed the pink slip as part of the downsizing move. In many cases, a different modus operandi is being employed by several IT companies, including Indian biggies and MNCs. “Now they are changing the mode of rem­oving the employees,” says Raja, who works with a multinational company. “For example, an employee is first transferred from the administration or fin­ance department to a third-party vendor and then eased out from there.” In many cases, the affected professionals have all­eged “pressure to voluntarily quit” after a non-transparent assessment pro­cess. This, in some cases, involves emp­loyees who have been awarded in the previous years for exemplary work.

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FITE says two lakh jobs may be lost this year and the trend will ­continue over the next two or three years.

While recruitment age­ncies peg the number of expected job losses in the IT sector over the next three years at 1.5-2 lakh, FITE fears that the two-lakh mark may well be crossed this year alone. In fact, the trend may well continue for the next two or three years, with an average of two lakh jobs being axed every year, fears the forum, which is seeing an expansion of its base largely through social media and personal outreach to help IT professionals. FITE’s fears may be exaggerated, but they do seem to have some substance.

Ankit Agarwala, director of Michael Page India, a leading professional rec­ruitment consultancy, says most job losses have been in service-based IT companies, which had largely foreign clientele. “We have not seen any significant job cuts in product- or technology-based IT companies, which usually have a dive­rse clientele,” says Agarwala. “Technology companies continue to innovate and grow in India, especially in the areas of artificial intelligence (AI) and cloud-­­based technologies.”

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Even though in percentage terms, according to Agarwala, IT sector job losses are comparable to other sectors, but the impact is more visible in the IT sector as it employs a vast working pop­ulation in India. Not every job under risk has gone away yet. The process has just started, warn experts.

Hastimal Sagara, assistant professor of economics at GLS University, Ahm­edabad, says the estimated job losses in the IT industry in India would be far greater in 2016-17 and after, compared to the past 25 years. “Most important reasons behind this unprecedented dev­elopment are the governments of the US, the UK and Australia imposing visa res­trictions on high-skilled immigrants, Britain’s exit from the European Union, slowdown in the Western economies and technological disruptions. These new developments have resulted in red­uced demand for IT exports from India,” says Sagara, who is doing his doctoral thesis on the IT industry.

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“Fears of job loss are ­exaggerated. The IT ­industry is still a net hirer,” says S. Gupta of NASSCOM.

Sangeeta Gupta, senior vice-president, NASSCOM, strikes a contrary note. She feels fears of job losses are exaggerated as “the industry continues to be a net hirer with talent acquisition continuing across sectors”. She points out that in FY2017, the industry added 1.7 lakh new jobs (six lakh in the past three years) and today it boasts of a total emp­loyee base of 39 lakh (including 95,000-1 lakh in start-ups and 50,000-60,000 in eCommerce).

“The sector is still one of the largest employers in the country. While there is a gentle deceleration in the net hiring growth rate due to shifting focus towards innovation, lower attrition and enhanced efficiencies, the sector continues to hire fresh as well as lateral employees in equal proportion. This indicates opportunities for employment at the entry as well as the mid-management level,” says Gupta, adding that the industry has been going through a phase of transition with the focus shifting from scale to skill and proficiency levels.

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Industry lobbyists claim that dependence on a few geographies like the US is giving way to IT companies exploring new markets to diversify. They say new regions are being tapped to increase the possible market size. As companies ­re-a­l­ign and re-adjust themselves to the changing business scenarios, a lot of low-skill jobs are being axed, while high-skilled new jobs are coming up in cyber security, mobile app development, new user interfaces, soc­ial media, data science and platform engineering, along with new skills like big data analytics, cloud computing, service delivery automation, robotics, AI, machine learning, and NLP (natural language processing) among others—all sub-domains of the digital economy.

Mohan Lakhamraju, founder and CEO of Great Learning, describes the job churn in the IT sector as part of the “fourth industrial revolution” that we are witnessing (the first being the invention of steam engine; the second, the introduction of assembly line production that revolutionised manufacturing; and third being the advent of computers, which now pervades every aspect of life).

“The fourth industrial revolution is being created essentially by data and intelligence. It is happening not because just computing devices but any device around us is now increasingly becoming able to communicate, compute and store data,” says Lakhamraju. “As a result, any job that inv­olved routine processes, where it is about processing of data gathered, using a set of instructions, can now be completely automated by putting in place software with the requisite instructions. For example, there is a lot of automation happening in the BPO (business process outsourcing) sector, which is referred to as the Robotic Process Automation. BPO, as we know it, is going to disappear. Similarly, in the IT sector, those who were doing manual testing of software are soon going to become obsolete as testing is going to become automated.”

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The increasing shift to automation in financial audit of companies or banks to track discrepancies and fraud, also by the Indian government, in tracking irr­egularities in bank deposits post dem­onetisation is a reality. Similarly, the $150 billion Indian IT sector is in the process of reinventing itself to remain relevant with more focus on technology products. “At the altar of this goal, it is willing to sacrifice much of its existing workforce instead of investing in reskilling them and is instead focusing on rec­ruiting young people with little or no work experience at lower salaries,” all­eges R. Vasumathi, president of FITE.

Corroborating the fears of the forum, Sagara says that due to disruptions ­created by newer technologies, the ­ret­renchment rate would far exceed the recruitment rate at least in the time to come. Unless IT professionals are ­ret­­rained, reskilled and repooled as per the demand in the industry, many among the existing workforce would continue facing the real danger of job losses in the near future.

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