Hyderabad: Major IT companies ranging from Infosys to Cognizant are witnessing layoffs on a very large scale. And the industry is attributing this attrition to growing digitisation, automation and cost cutting mechanisms and has nothing to do with the H1-B visa regulations. This comes after the industry has witnessed slowed down in growth over the last few years.
Giving an overview of how the layoffs are happening, Telangana Information Technology Association President Sundeep Kumar Makthala told Telangana Today, “Let’s say a company management decides to downsize 7 per cent of its employees, and then these employees are given fourth rating.
As soon as fourth rating is given then Performance Improvement Plan (PIP) is initiated wherein the employees have to show better ratings in 60-90 days. Once the period is over, the management will not increase the ratings and call the employees and tells them either to resign voluntarily or they will be fired. As the employees fear bad review of their tenure due to firing they opt to resign themselves.”
This, according to Makthala, is shown by the companies are voluntary attrition and it is not seen as layoffs as such. Thus, the company will be able to downsize itself and save cost per employee.
Major part of the pink slips have been given to mid-level employees as the company feels they are not ready to adapt to changing technological disruptions. “Employees who have been on the job for almost 35 years are not in a position to upskill themselves and adapt to the changing technologies. Thus it is important that these people take up entrepreneurship and become job creators,” informed Makthala.
However, industry experts are looking at this scenario as not recession but just a ‘technological disruption’. “The IT industry is going through transition and there is requirement for new skill sets. Thus, this is a very normal process of layoffs that are happening and it will only be a short-term scenario. The employees will have to look at improving their skills,” said an IT expert who did not wished to be named.
“What we are going through isn’t recession, but technological disruption. The traditional IT is being disrupted by digital technologies, and is transforming the way in which enterprises operate. The job market is, likewise, poised to be disrupted by automation,” said Niranjan Chintam, founder and chairman, Kellton Tech.
Nasscom has stated that the total employment for the sector grew by 5 per cent in FY17 as against 6 per cent in FY16 and minor deceleration is expected to happen in the industry as it focuses on productivity and automation.
In the past few months, Cognizant has announced its plans to lay off 6,000 employees, Wipro about 600 while Tech Mahindra plans to sack 1,500 staff, all as part of their performance appraisal proces. IT major TCS however denied any plans to layoff its staff.
Issue Taken Up With Labour Department
A group of employees who have been put on bench by their company has sought intervention of labour commissioner after their company put them on bench. They have approached Rangareddy labour commissioner Chandra Shekaram. Following this, a meeting was convened by the Labour department here on Thursday.
The meeting was attended by employees who have been put on bench, those who have resigned recently and also members of industry body Telangana IT Association. Company representatives were also present, who sought it would need two weeks to take up the matter.
Accordingly, the companies offered them to pay two month salary as compensation. However, the employees said it would help them if they were paid six month salary.
The layoffs by big IT companies both at national level and in Telangana State has not only created apprehensions among the employees associated with IT industry but also impacting the younger generations who aspired to be part of this rather rapidly thriving industry, said Makthala of TITA.
“The insurance policies of IT employees must continue till one year of their leaving the job instead of abruptly closing it,” he said explaining about the additional burden besides the job loss. These are given on a cost to company basis and they cease to exist once people are out of job. “We want this to be addressed as additional medical expenses will affect the family members financially,” he said.
TITA said the industry must have a rational approach towards cost cutting and laying off employees. The State government or Labour department must ensure that ousted employees are accommodated in State-run IT programmes.
Makthala said the IT industry was facing a distressful situation across the globe and that this had impacted local IT business in Telangana too.
TITA general secretary Srilatha Chinthala called for collective efforts of State government, industry and employees to contain the ill-effects of layoffs in the IT sector.
Said a software employee: “Several people have been asked to find a new job for themselves. The message is being spread through word of mouth and many are getting restless.” She has seen many people leave in the recent times. For her, it could be a double trouble in the offing.
Her husband- who works in another company- too has been hinted to find new options in three months. He was making plans to fly to US and then take her along. But those plans are out now.