India’s IT Industry in Turmoil; 56K Engineers May Be Axed

Over 56K engineers in the IT Industry face the axe this year due to two major factors – changes in business models and Trump’s protectionist policies.

In one of the worst churns, Information Technology (IT) companies in India are staring at a major crisis. In what is billed as the largest retrenchment drive, at least 56,000 engineers are likely to get the pink slip.

Most of the engineers being asked to leave would be from the seven top IT firms in India, including multinationals. And this will happen this year. This is mainly due to two factors: the under-preparedness of the engineers in adapting to newer technologies and dealing with fallout from US President Donald Trump’s protectionist policies.

Also Read: Trump’s Ominous Shadow Falls on Colleges in Bengaluru

According to The Hindustan Times, the number of engineers facing sack is at least twice the employees laid off by the companies last year.

The seven companies planning to cut down manpower across India are: Infosys Ltd, Wipro Ltd, Tech Mahindra Ltd, HCL Technologies Ltd, US-based Cognizant Technology Solutions Corp, DXC Technology Co, and France-based Capgeimini SA.

Together, these seven companies employ 1.24 million people. They together now plan to let go of 4.5% of their workforce in 2017.

Cognizant, Capgemini, Wipro and Tech Mahindra started letting go of employees in February. Infosys, HCL, and DXC are expected to do so later this month. Most employees being asked to leave are engineers with at least six-eight years’ experience

However, at another end of the spectrum, these companies would continue to hire young engineers, probably at scaled down salaries.

Also Read: Techies: Not Paid Well? Here is Why

The numbers were collated by Mint after extensive interviews with 22 current and former employees across these seven companies, HT reported.

Preparing the ground for layoffs, the seven companies have put many employees on notice by awarding them the lowest ratings. Cognizant has placed more than 15,000 employees in the lowest category (bucket IV), and Infosys placed more than 3,000 senior managers in the category of employees needing improvement.

DXC Technology is planning to reduce the number of offices in India from 50 to 26. The company plans to ask 5.7% or 10,000 of its 175,000 employees in India to leave this year.

The HT report said all seven companies are in denial mode and attribute the planned exits to a “marginal” increase in the number of poor performers on account of a “more rigorous” performance evaluation process.

But there is no denying that at the heart of the problem is that traditional business models are slowing. At the same time, IT companies find themselves wrestling with fundamental change in the newer business models.

“All of us have to re-look at the existing talent pool to make sure it is aligned to future needs,” HT quoted the HR head at one of the seven companies.

Added to the problem is Trump’s protectionist policies. Due to this, Indian IT companies are asking Indian H1B Visa holders to return home.

Also Read: Trump Signs Executive Order To End H-1B ‘Misuse’

Infosys has already announced that it plans to hire 10,000 US citizens over the next two years. Wipro has hired over 2,800 locals over the last 18 months. By end June 2018, half of its total workforce in the US would be locals.

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