Job cuts in IT sector – What Went Wrong

The layoffs in India’s IT majors, among the largest private employers providing jobs, is bit worrisome. Added to it the backlash the IT industry is facing in the US on the H1-B visa front, and in countries such as Australia, Singapore, the future of the industry as a beacon of hope for young professionals is dimming, feel many.

The Mc-Kinsey report mentioning that 50% of the workforce will become redundant soon only points to the growth curve moving towards south.

Is projected slow growth in the IT industry a result of policy changes across the globe or is it an after effect of our own demonetization. To my knowledge the above mentioned factors have a negligible impact on the growth rate of the industry. Then, what are the significant factors that are the cause of this sudden down-slide and the unexpected job cuts.

Automation: Every business is going through huge transformation with the rampant use of technology that is making several traditional jobs obsolete. Industries like Automotive and Banking sectors have already experienced this. IT sector is new to this with automation making some of the low end jobs redundant.

The issue has become more pronounced with the job losses striking the IT industry. The problem is more for the homegrown majors who have made an international mark and seen as a good paymaster.

Capacity building : One of the unique nature of the IT industry as against the other industry is that the growth of an organisation is not restricted to production capacity as seen in manufacturing and other industries. An IT organisation’s growth is directly proportional to its ability to ramp up its delivery capabilities and this doesn’t require large lead times. Innovative methods like Work from home, onshore, offshore model etc really helped in the rapid growth. With the overall growth slowing down organisations feel the heat of excess manpower and are forced to trim their size.

Skill Development : With the growth rate being so high all these years organisations and individuals seldom focused on “Sharpening the Axe”. Training and technological development was given a miss unless it was absolutely necessary. With the growth rate slowing down the less skilled are the ones sure to face the heat.

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