Almost every sector is undergoing a tough phase as far as employment is concerned. But the Information Technology (IT) companies are the worst hit.
According to a Mint report, seven of the biggest IT firms in India are planning to layoff atleast 56,000 engineers this year in its largest retrenchment drive.
The seven companies—Infosys Ltd, Wipro Ltd, Tech Mahindra Ltd, HCL Technologies Ltd, US-based Cognizant Technology Solutions Corp. and DXC Technology Co., and France-based Cap Gemini SA—and which together employ 1.24 million people, plan to let go of 4.5% of their workforce in 2017.
Cognizant is, reportedly, expected to reduce its employee count by as much as 5%, which translates to close to 10,000 workers. Earlier this month, Infosys had made an announcement to hire 10,000 local employees in US following the stringent HIB visa norms.
Preparing the ground for layoffs, each of these seven companies has already put a higher number of employees on notice by awarding them the lowest ratings, said the report. Cognizant has placed more than 15,000 employees in the lowest category (bucket IV), and Infosys has placed more than 3,000 senior managers in the category of employees needing improvement.
Infosys, India's second largest software services company, has reportedly delayed salary hikes and also sought to put to rest speculation around "planned layoffs". In an email to employees, chief operating officer Pravin Rao said, "This year, the Compensation Review will be effective July 1, 2017 for JL5 and below in India. For the remaining employees, we will roll out the compensation review in subsequent quarters." Mr Rao also "put to rest any speculation around planned layoffs". However he said that "as has been the case in the past, we will primarily see some performance based exits."
In the past, between 1% and 1.5% of a large Indian IT firm’s employees would be asked to leave every year on account of poor performance. The number was 3% for foreign companies with large Indian operations. This year, the range is likely to be 2-6% across Indian and foreign companies, the report further added.
Experts point out to several developments which have caused this upheaval in the IT industry. Primary among them has been the constant appreciation of the Indian rupee over the last couple of months which has badly hit profit margins and revenues of companies.
For most of the companies, revenue of their top 10 clients has seen negative growth while the top 6-10 clients have seen revenue grow by just 3-5 per cent in the last three years.