May 16, 2017 - 5:08pm
The future looks grim for thousands of employees of Indian IT industry who have been handed pink slips over the past couple of months. A double whammy of automation and lack of key skills may result in many of them being unemployed for a while.
Recruiters and experts said the number of jobs lost is unprecedented in the history of IT industry and perhaps larger in magnitude than the 2008 global economic crisis. A small number of people sacked from companies like Wipro and Cognizant may be absorbed by second rung firms, but since the number of resumes in the market is huge, not all may find jobs. There are about 40 lakh Indians employed in the IT industry in India and overseas and of them, 12 lakh professionals cannot upgrade their skills or acquire new ones, Kris Lakshmikanth, founder of Head Hunters India, told ET.
"Of this 12 lakh, almost half would gradually be shunted out of the IT industry," said Lakshmikanth. According to their estimates, close to 2 lakh professionals every year would be retrenched by IT companies in India and abroad.
Since the situation may get more acute in the future, professionals may be forced to switch industries altogether and look for jobs in banking and financial services, retail or emerging sectors such as fintech or ecommerce.
Peter Bendor-Samuel, CEO of consultancy firm Everest Group, attributed the churn to the industry's "arbitrage-first" or off-shoring business, which shrank in the past 12 months, and the shift towards digital models.
"The digital business cannibalises the arbitrage business and compresses that revenue by 30-40% and requires 30-40% fewer people to do the work," Samuel said. He added that because of this, service providers have an excess number of employees for the first time since the global economic crisis of 2008. According to some estimates, the top four Indian IT services companies may let go 12,000- 15,000 employees in the coming months.