IT job market crashes: Infosys, Cognizant and others reportedly fire thousands

[CAD]

The IT job market in India is seemingly crashing. There are reports that the information technology firms in India are in the middle of one of the largest job cuts ever seen in this Industry.

The number of layoffs this year is set to be twice that of last year, with inability to adapt to new technologies, inadequate growth, rise in costs (and subsequent fall in profits) and the use of automation tools which reduce the number of employees needed the main reasons behind the same.

Seven of the biggest IT firms in the country are in the process of laying off more than 56,000 engineers. This number is only set to grow as companies have been unable to deal with newly elected US President Donald Trump's nationalist-protectionist policies.

As a result of Trump's new policies, many IT companies are in the process of hiring US citizens and asking Indian H-1B Visa holders to return back to India . According to Livemint, Infosys has announced plans to hire 10,000 US citizens over the next two years and Wipro has already hired over 2,800 US citizens in the past 18 months.

Job cuts at Cognizant

Cognizant seems to be the worst hit as the company is planning on cutting off as many as 6,000 jobs - representing a whopping 2.3 per cent of its total workforce.

The company is reportedly struggling with adapting to new technologies and digital services and is laying off employees in lower-end jobs which are becoming redundant because of automation.

The number of layoffs this year is set to be twice that of last year due to inability to adapt to new technologies, inadequate growth and rise in costs

Cognizant has also reportedly placed close to 15,000 employees in the lowest category - Bucket 4. That is, they have put them on notice by giving them the lowest ratings possible.

A spokesperson told Livemint that performance-based reviews this year are consistent with past ones and that the company has not conducted any layoffs.

Job cuts at Tech Mahindra

Software services company Tech Mahindra, which ranks fifth amongst Indian IT firms on the basis of revenue, has also reportedly let go of more than a thousand employees this month.

A Tech Mahindra spokesperson said. - "We have a process of weeding out bottom performers every year and this year is no different".

Job cuts at Snapdeal

In the middle of Flipkart acquisition rumours, the struggling e-commerce player is reportedly planning to cut a huge 30 per cent of its workforce as a result of poor growth, reduced revenue and incurring losses. More than 1,000 employees are expected to be affected by this decision.

Job cuts at Infosys

Reports claim that Indian IT colossus Infosys is planning to lay-off as many as 1,000 employees in the coming months. The employees in question are said to be those working as project managers, senior architects and in other high level-positions.

As a result of Trump's new policies, many IT companies are in the process of hiring US citizens and asking Indian H-1B Visa holders to return back to India

In fact, Infosys has already started laying off employees. Last month, the IT giant asked 500 plus employees to leave on the ground of 'non performance'.

In a bid to warn employees, Infosys has also reportedly placed more than 3,000 senior managers in the 'employees needing improvement' category.

Job cuts at DXC Technology Co

DXC technology is also in the midst of a three-year plan to reduce overheads and cut the fat. The company is planning to reduce the number of offices in the country from 50 to 26 and is also planning to lay-off 10,000 of its 170,000 strong work-force.

Job cuts at Aircel

Cutthroat competition and Jio's disruptive pricing policy has impacted almost all of the telecom operators in the country badly. The struggling telecom operator reportedly fired 700 employees in February - which account for more than 10 per cent of its Indian workforce.

Job cuts at Wipro

Wipro has also reportedly started the process of making the organisation leaner and more decentralised by reducing unwanted and excess managers and executives.

A Wipro spokesperson reportedly said: "Performance appraisal may also lead to the separation of some employees from the company and these numbers vary from year to year".

Wipro is planning to trim the fat by removing unnecessary layers such as project leaders which the company feels are not needed anymore as a result of automation.

Job cuts at Tata Teleservices

Tata Teleservices, which along with Tata Teleservices (Maharashtra) has a presence in 19 telecom circles in the country has reportedly fired as many as 600 employees in sales and other similar sectors.

According to Gadgets Now, the lay-offs have been done at multiple locations and the sacked employees are being offered a severance package consisting of just one-month's salary.

Tata Consultancy Services Ltd (TCS) on the other hand is reportedly not planning to initiate any layoffs this year.

 

[GR!FF!N]

The IT job market in India is seemingly crashing.

which noob has reported it??

Job cutting is mainly due to Automation,Inclusion of AI for several processes amd US policy.But that doesn't mean IT market is crashing down.

TCS is leader of Indian IT sector and they simply said,they've no plan of layoff,instead they're looking forward to hire more and more.Its all about their business policies.

Most of the big names reported here,they lay off hundreds each year due to poor performance.

 

[Viny]

This kind of regular churning of resources, they hire thousands of freshers as it costs low and fire up upper and middle mangers who can now be easily replaced with the next gen aspiring performers. And most of this middle level managers they go and join the startups as they seek someone with good experience

So its very much cyclical. Automation in certain areas have reduced the clerical kind of jobs, but that also means that now more force would be pushed towards the next level that above clerical works, thats always good for knowledge based industry, because knowledge is what powers it The more faster we grow on this levels bigger the market coverage we will have. Because it would not be easy for other small markets with very minimal experiences to catch up with levels of technology.

 

[Rajaraja Chola]

This is good in a sense. Its time for companies to focus on other technologies which they have never ever concentrated till now. Its a shame that new companies are becoming leaders in AI, while the outsourcing companies never even invested in them.

But its not crashing down idiots. Out of millions employed in IT industry I expect 10000 jobs to be cut.

 

[Stephen Cohen]

When all these Indians return to India maybe they can go to that Trump Temple they have and give prasad.

For your Kind Information ; India's IT exports will Remain at 110 Billion Dollars
event this year

What has happened is a combination of recession and Technological changes happening

 

[Mugwop]

infosys is not cutting any jobs

 

[Articulate]

This is good in a sense. Its time for companies to focus on other technologies which they have never ever concentrated till now. Its a shame that new companies are becoming leaders in AI, while the outsourcing companies never even invested in them.

But its not crashing down idiots. Out of millions employed in IT industry I expect 10000 jobs to be cut.

Yes.

Personally, I think this is a gigantic blessing in disguise for our IT sector. They were heading for a full blown crash to extinction in 10 years if they did not change. Automation coming in IT sector heavily.

This event - Trump et all, is forcing them to see the dismal future they were heading into and they are NOW finally trying to change. Its time to jump from process outsourcing to product development (that these companies were just not doing)

 

[ashok321]

Every fifth techie may lose his job, and a new job won't come easy

Why job prospects in IT outsourcing will only get worse in the coming years before they get better

Mithilesh Singh (name changed) knew he was in trouble when he was called into a conference room as soon as he walked into work one morning in mid-April. In the room in a vast complex of offices in Bengaluru, the software engineer with about a decade’s experience across three large technology out sourcers, was told he was being fired. His bosses and an HR executive surmised that his performance wasn’t up to scratch (he was rated at the lowest level in the last appraisal) but, more gallingly, his bosses told him bluntly he wasn’t “future ready” in an industry in constant transition.

Having ticked several things on the stereotypical software engineer’s checklist — an onsite stint, comfortable lifestyle in one of the large gated communities in the IT capital and annual foreign holidays — getting the sack was a rude shock.

If that wasn’t enough, an almost cocky Singh has suddenly discovered, almost two months on, that his employment opportunities aren’t as rosy as he expected. The industry is glutted with engineers of his experience and skill. And as companies attempt to reshape themselves into leaner outfits, leaning more on automation than engineers wading through grunt work, Singh faces an uphill battle to find his next job. He has attended at least half a dozen interviews and hasn’t got past the second round of any of them. For thousands of engineers like him, the latest wave of retrenchments — triggered by tightening immigration norms, an industry in upheaval and companies scrambling to keep pace — has been perhaps the rudest wake-up call of all.

This disquiet is being driven by sharp changes in India’s $150 billion outsourcing industry, which depends on an army of engineers to provide low-cost software services to clients around the world. For two decades and more, Indian technology companies have been happy to recast the technology backend for their customers, squeezing extra revenues and profitability by improving technology processes and off-shoring IT services work to lower cost locations. However, over the past few years this heavy reliance on cheap labour — Indian coders were even targeted with the software coolie jibe years ago — has slowly ebbed as the market has evolved.

According to estimates from Nasscom, jobs in the IT industry grew just 5% in the financial year 2016-17, even as the industry grew 8.6%. The industry lobby thinks a fifth to a quarter of all jobs could be lost in three years.

Future Shock
Automation and robotics and new opportunities in areas such as internet of things have meant that software engineers and enterprises have struggled to keep pace with this change. “Future opportunities aren’t in maintaining computer systems or programming languages,” says Vivek Wadhwa, distinguished fellow, Carnegie Mellon University’s College of Engineering, and an industry watcher of several decades.

“They are in robotic manufacturing plants, analysing massive amounts of data using artificial intelligence, and creating apps that can revolutionise fields such as healthcare, education, and finance.” India’s out sourcers have struggled to jump on this bandwagon, even though they have seen it approaching for the better part of a decade. Jobs in areas such as testing, system administration and IT infrastructure management are likely to disappear fastest, as automation catches on, say HR consultants.

Rewind to 2008-09. On the declaration of the fourth quarter and full financial year results for the year in which the global financial markets imploded, Wipro scrambled to protect its businesses and took the opportunity to position itself differently. “Customers are beginning to look at just much more beyond, you know, offshoring to India or outsourcing to India,” Wipro’s then joint CEO Suresh Vaswani told the media. “They are really looking at much more value…. So, it is about more value-driven sales rather than just driving offshore to India and therefore getting cost benefits on account of rate arbitrage. Customers are looking for much beyond that.”

Across town in Bengaluru, Kris Gopalakrishnan, the then CEO of Infosys, sang from the same hymn sheet. “We continue to become more strategic to our customers and are increasingly participating in large and complex transformational deals to deliver end -to-end integrated solutions across our differentiated service lines,” he said on the completion of the company’s own financial year. Over the past decade, both these firms and their rivals have been attempting to make this transformation. But they have also tenaciously hung on to their old businesses, which generate jobs for millions of people and returns to keep investors and shareholders happy.

“I have been warning Indian IT that it is in trouble, for two years now,” says Wadhwa. “The writing is on the wall — the markets and opportunities are changing. The industry needs to reinvent itself and take advantage of advancing technologies. They are shuffling deck chairs on the Titanic.”

Even as companies have been slow to change, the world of technology has been a blur of activity. Companies have shifted from outsourcing and off-shoring (US President Donald Trump’s hawkish stand has only pushed them to transform faster) and towards newer initiatives around data analytics, managing an interconnected world of devices and services called internet of things and even further afield subjects such as artificial intelligence and robotics. Unable to keep pace with managing these new requirements and technologies, Indian companies’ growth has stalled and jobs, which were plentiful for the better part of a decade, have begun to vanish. Experts think that while the pace of job cuts may be slow for now, it is likely to pick up over the next few years.

“In the short run, that is to say this year, we can expect most Indian firms to make modest reductions in headcount… most of these reductions will come in the form of top grading (they will raise the bar on their internal evaluations and seek to exit the lower performers) or those who are on the bench for a protracted length of time,” says Peter Bendor-Samuel, CEO of Everest Group, a technology services advisory.

“More than one firm is talking about a 10% adjustment to the existing India-based workforce. As we look forward two or three years, we can expect this reshaping of the talent pool to pick up pace with perhaps as much as 20-40% shrinkage over that time.”

Technology companies based in India or with a large employee base here may be finally making these painful cuts. Over the past few weeks companies, including overseas-based ones such as Cognizant and Capgemini and India-based outsourcers like Wipro, Infosys, Tech Mahindra and HCL Technologies, have all begun to fire thousands of people. Industry leader TCS is in the midst of its annual appraisal process, with a company rep denying any layoffs were afoot.

Other spokespersons — for Cognizant, for instance — contended that there were no layoffs happening, but rather two distinct processes underway. The first was a regular annual appraisal process, the spokesperson added, while the second one-off event was for six bands of senior leaders, who could opt for a voluntary separation programme. “As part of a plan to accelerate our shift to digital, we are taking steps to ensure that our workforce is appropriately aligned to deliver growth. We continue to recruit and hire across all of our practices and are expanding facilities globally, ensuring that we have the right expertise to help our clients,” the rep emailed. “We do not expect any disruption to our day-to-day operations as a result of this initiative.” Nevertheless, rumours abound that the firm could fire as many as 10,000 people.

Analysts tracking the company contend that there could be more bad news around the corner. “We expect Cognizant to deliver just 6% revenue growth (in dollar terms) in calendar year 2017 vs its guidance of 8-10% because, for the first time in its history, it has changed its strategy to focus on profitability,” Sagar Rastogi, an analyst with Ambit Capital, said in a recent note to investors.

“It has already slashed pay, held back on hiring and has been laying off employees. For instance, the CEO’s pay for CY16 was cut by about 30%. It has had an unusually harsh performance appraisal cycle for CY16… this has already started reflecting in weak employee morale/senior exits which will likely hurt customer satisfaction and therefore revenue growth.”

Where’s Work?
In Chennai, Vinodh AJ, general secretary of Forum for IT Employees (FITE), is squaring up for a prolonged fight. “Last week, we met labour department officials in Chennai and also in Hyderabad about the opaque manner of dismissals at Cognizant,” he says. “Our case was patiently heard in both states and the company has been told to not make any arbitrary moves.” While FITE has been focused on Cognizant, techies from other companies are reaching out as job losses begin to bite. “We will first look to build our base in Hyderabad and then look at cities such as Bengaluru and Delhi, since we are getting many questions from affected workers in large companies in these cities.”

The angst of Vinodh may be reflective of a bleak future that employees are facing at many technology outsourcers. While routine manual coding (and a business reliant on offshoring) may have kept millions of coders employed, a major shift in strategy could upend their employment plans. According to headhunters, young employees need to be flexible with their choices in a tough market. They could, for instance, consider working at smaller companies rather than be picky about working with marquee employers. In the middle, executives who have traditionally managed large teams of engineers and the work they execute need to reskill themselves quickly or risk becoming redundant. As sackings at Cognizant show, even senior talent isn’t immune to the pink slip. “As companies look to trim their people costs, cutting (costly) senior managers who are superfluous in the new order of things may be the first to go,” says Venkat Sastry, who leads technology hiring for Heidrick & Struggles, an HR consultancy.

Tarini Shekhar (name changed) has worked in a leading IT services company for over 15 years, graduating from being a junior executive to managing an offshore team of several thousand people spread across the globe. Until 2014-15, she was a prized employee, winning laurels and being chased for roles within and outside her organisation. Then, around two years ago, things changed. First, she was asked to shift to a new project abruptly, then moved to a team ostensibly focused on new businesses (which felt like being parked on the bench) and earlier this year was put on a performance-improvement programme.

“The message was loud and clear,” a shaken Shekhar says. “My old skills were quickly becoming irrelevant and I had to shape up, as my HR manager told me, or ship out.” By the end of this month, her fate will be sealed — one way or the other.

In February this year, discussions at the flagship event for the industry, Nasscom India Leadership Forum, were not about more of the usual, but of how to steady a rocking boat. Industry executives did much of the rocking, even as attendees flocked to discussions on emerging topics. A small room where a talk on blockchain was underway was inundated by attendees, forcing organisers to barricade the doors. Meanwhile, in the main conference hall, Srinivas Kandula, CEO of Capgemini India, laid out a bleak future for employees. “It (retraining employees) is a challenging task and I tend to believe that 60-65% of them are just not trainable,” he said. A company spokesperson clarified that that he was referencing to McKinsey data and that the firm itself has retrained some 50,000 employees last year, even as it expects to retool everyone (about 1 lakh people) by 2018.

Despite these statements, companies are acutely aware that they need to urgently make a shift and worry about how quickly they can retrain their employees, if at all. “We will not survive if we remain in the constricted space of doing as we are told, depending solely on cost arbitrage, and working as reactive problem-solvers,” Infosys CEO Vishal Sikka had warned in his New Year’s letter to Infoscions.

If Infosys previously set the benchmark for the industry in the quality of service, clarity to investors and wealth generation to employees and shareholders, it now finds itself in the firing line. According to one estimate, the company may have fired 8,000-9,000 people in 2016, with 1,000 senior managers facing the ax this year An Infosys spokesperson denied anything out of the ordinary was underway. “Our performance management process provides for a biannual assessment of performance.

Therefore, as part of this regular process, performance assessments are done with reference to the goals individuals have on business objectives and other strategic priorities for the company,” the spokesperson noted by email. “A continued low feedback on performance could lead to certain performance actions, including separation of an individual (sic). We do this every year and the numbers could vary every performance cycle.”

A spokesperson for crosstown rival Wipro too denies any layoffs. The spokesperson says Wipro is hiring in India and overseas (1,305 employees in the January-March quarter), with plans to localise half its US operations. The firm has added two new US centres to build digital offerings and is working with employees to upgrade their skills. “Wipro’s re-skilling programmes are a combination of aspects such as delivery, domain, technology and behavioural training,” the spokesperson says. “In fiscal year 2017, we trained 39,600 employees in digital skills and, overall, we now have 61,000 technical employees trained on digital skills.”

Missed the Bus
According to insiders and analysts, out-sourcers have been guilty of using new software platforms, automation and robotics to burnish margins (and protect shareholder returns) rather than push for any visible transformation in the business.

Their customers themselves are not sure if they will go for this metamorphosis and are concerned with the current flux in the market. “The US and European clients are very sceptical on whether their Indian vendors have the right talent or business model to be effective partners in the digital journey,” says Bendor-Samuel of Everest Group.

“They hear a lot of talk from the Indian firms’ executives but little to no change in how they are serviced. Indian firms are struggling to capture a large share of the new digital market. All the clients I have talked to recognise the very significant challenges the Indian firms face and are starting to vote with their feet by looking to onshore (technology contracts) and (use) different vendors for their digital needs.”

Other experts concur. “Much of the business and workforce of Indian IT companies is skewed towards more traditional services, which are declining.

Indian IT companies now need to speed up this change, but it is going to be a painful transformation for some,” says DD Mishra, research director for technology researcher Gartner. “Indian IT professionals will have to concentrate on re-skilling themselves and acquire competencies that are in demand to beat the obsolescence. The impact on new hiring and workforce rationalisation will continue for the next two three years.”

As large-scale job losses loom in a sector traditionally viewed as an employment-generation engine, Vinodh, the union leader in Chennai, is digging his heels in and preparing for a protracted fight. “Companies aren’t treating their employees fairly and are using a variety of excuses to improperly sack them. We have given them fair warning and, if this continues, we will consider a full-fledged agitation.” For employees who have been sacked or are facing the ax, storm clouds may be gathering.

Software engineers may be short of employment options in a tepid market
For software engineers laid off in the current round of restructuring, finding jobs outside of the industry or in allied areas will be a challenge. In old-world engineering, for one, companies are slashing jobs or slowing hiring. In November 2016, engineering giant L&T announced plans to fire 14,000 people as it re-looked at its business and faced up to slowing demand and the rise of automation. The $16 billion conglomerate which, in 2016 initiated a plan to become a Rs 2 lakh crore company in five years, has identified some struggling units to review as part of this shakedown.

Startups too offer little succour, with funding down to a 22-month low of $125 million across 31 deals, according to Venture Intelligence, which tracks such data. As funding has dried up, companies and jobs have disappeared. Other sectors, where engineers could be employed are getting consolidated or are burdened by massive debt (telecom and infrastructure, respectively) and jobs are being pruned, rather than added. According to a report by World Bank, three sectors — software services, telecom and financial services — could shed 1.5 million jobs by August 2018. Meanwhile, 69% of all jobs in India could be threatened by automation.

Another reason for the lack of options is the kind of work on offer at many of these companies. In old-world engineering, for one, young engineers are often on the field. The shock of visiting a greasy oil rig or supervising an expressway may be too much to stomach for coders used to cushy campuses. What’s more, they won’t earn as much as they did. Thanks to generous remuneration and perks like stock options and variable pay, software engineers may find themselves golden-handcuffed to the IT industry. The other hurdle they face is one of employability.

IT companies put fresh recruits (often from a range of engineering and non-engineering backgrounds) on a three month training period. Old-world companies, already struggling for growth and talent, may not be able to afford this luxury. And here’s some data, which could really put things in perspective, for those engineers worried about their IT jobs. According to data released by the Labour Bureau, 550 jobs have been lost daily for the past four years in India across organised and unorganised sectors. By 2050, as many as seven million jobs may disappear. Sobering data for an industry and employees in flux.

 

[ashok321]

Layoffs in Indian IT may continue for 1-2 yrs: Experts:

 

[ashok321]

• Why this ex-CEO is worried for Indian engineers

Job prospects in IT outsourcing will only get worse. Here's why

 

[ashok321]

• For fired techies, the next job may be hard to find

 

[Vishwabalas]

Considering Trump's crack down on US visa, I suspect the IT market in India is only going to expand.

 

[Crixus]

This donkey dose not know about 2008 and 2002 ...its just repetition of the cycle

You seem to be more than happy while reporting these news. While the recent development will hit hard on our job market. It will be a worse hit for all aspiring IT markets, India is not just alone in this. Such changes are expected in our industry around every 4 to 5 years due to technological advancement. So not surprised at all.

 

[Vishwabalas]

I am sure they would have found a job more easily.

 

[Vishwabalas]

I guess I will get even more negative ratings from those don't wish to see mirror while I show them one.

After all it's their turf, Not Surprised At All.

Coming back to the topic, when did I attacked you personally ??? I just showed you the mirror I guess.

Congratulations on your 11 Negative Ratings

Its a medal of honor. A worthy battle scar. It will only increase your respect among Indian posters.