India’s IT sector may see mass layoffs as demand outlook remains weak

Instability across the global information technology sector, which employs a large pool of fresh college graduates, has been laying off thousands of employees in the wake of the coronavirus pandemic.

IT companies in India, too, have resorted to layoffs, though they have been linked to non-performance. Many IT employees in India are being sacked on grounds of non-performance, while some are being sacked due to lack of projects.

However, the underlining reason that has triggered a fresh wave of IT layoffs seems to be related to downsizing workforce in an uncertain business environment, reports livemint.com.

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The reduction of employees by global IT companies is not new, they have been doing it for the past two years in light of new technology that has emerged; more positions in the IT industry are being rendered useless due to automation. It now seems Covid-19 may accelerate the downsizing process and automation is likely to get a boost.

According to the report published in livemint.com, IBM Corp is laying off around 2,000 employees globally in a bid to reshape or reorient its business with the present setup. While not confirmed, a fraction of its employees in India could be affected. It may be noted that India accounts for one-third of IBM’s total number of employees.

Another major name in the IT domain, Cognizant Technology Solutions, recently cut thousands of jobs in India, the report added. A lion’s share of Cognizant’s employees is based in India.

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A spokesperson for Cognizant told livemint.com that the layoffs were linked to performance and added that such a practice is normal across all firms in the IT industry.

Bench employees have been the first casualty from the IT industry as they are not part of any existing projects. Since benched employees are “non-billable” or are not billed to any client, they are becoming the first ones to be laid off.

While most Indian IT companies said there would be no layoffs due to Covid-19, there are chances of an increase in performance-based exits if the demand situation continues to remain weak.

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