Once booming, IT sector is now in for tough time when it is witnessing rampant mass layoff. Nationalised approach overseas, especially in US; changing trends in the global IT sector, skill gap between industry and academia and emergent role of automation in IT sector are the prime reasons. It’s time for workforce in the IT sector to make value addition to the industry or just brace itself for tougher times ahead.
It wouldn’t be wrong to say that there are tough times ahead for the employees of the Indian IT sector. According to a latest report in ET, the size of sovereign IT industry is worth approximately $150 billion and it employs a workforce of over 3.9 million. From this workforce, it is estimated that around one-fifth i.e. around 0.8 million people will lose their jobs by 2020, with around 12,000 to 15,000 people likely to lose their jobs by the end of this year.
The IT sector has been a significant source of revenue for the Indian economy in last couple of decades. These ongoing mass layoffs have a direct impact on our economy. In the flourishing periods of the IT saga, companies gave good remunerations to obtain manpower, and thus a lot were attracted towards this industry. But now instead of increments, there are layoffs; such that even people at high executive positions are being asked to leave. All big companies are laying off, and small companies cannot afford to accommodate them at such salaries they are accustomed to having. The inflow in the job market is increasing at an exponential rate, much quicker than rate of job creation.
Looking at this, it’s not surprising to wonder, what went wrong? While the giant players in the industry give the reasons of layoffs to be the changing of business model, redundant skills, poor performance, streamlining, etc.; the reasons and effects behind these mass layoffs in the Indian IT industry need to be explored further.
Broadly, the reasons for these layoffs and the problems in the Indian IT sector can be attributed to many factors, including but not limited to the export clients nationalized approach, changing trends in the IT sector, skill gap between the industry requirements and employee skills, and automation in the industry.
Some experts believe that one of the biggest threats to Indian IT sector, which is also an influence for these ongoing layoffs, is the increasing level of protectionism, promoted by the President of the United States, Donald Trump and the new regulations being implemented by him. His measures clearly show that he, for sure, wants to control the inflow of outsiders entering his country. According to a report by Recode, in 2016, Indians received around 75% of all H-1B visas issued. Most of these were IT professionals visiting their overseas clients or sister companies concerns for professional reasons. In the current scenario, it is quite possible that the number of visas granted could be restricted to a level never seen before. Also, this phenomenon of right wing leadership is not limited only to the US, but is prevalent in many countries around the globe, countries that are large customers of the Indian IT sector. Nonetheless, this factor of overseas nationalism has a comparatively lower effect on the Indian IT industry as compared to other major factors. Thus, while other nations are insourcing their projects which were earlier outsourced to vendors, Indian IT needs to wipe the image of being an IT vendor and create new and unexplored opportunities for becoming self-dependent.
In the Indian IT sector, the market situation is changing, customer expectations are changing, technologies are changing, but the skill set is not yet ready to change. Earlier the work process was such that people from IT companies enquired client’s needs and delivered accordingly. If there were any modifications to be made, they were done and then the client would then implement the solution. Now, client expect more. The kind of solutions which were in demand earlier, now exist everywhere; therefore now the customer wants the IT person to take on the additional role of a consultant. These consultants are required to study and understand the client’s business, then figure out the prevailing problems and opportunities; and then finally propose a solution. This solution is then to be negotiated upon, and upon approval it is to be constructed by the IT companies.
Owing to the increasing use of Big Data, the job opportunities for data collectors, analysts and scientists are increasing. This again is leading to an increase in the importance of the fields of artificial intelligence and machine leaning. In order to cope up with these, and deploy these solutions, the skills of mathematicians and statisticians are required along with the coding skills of IT engineers. But, these engineers are hardly taught any data analysis. This is precisely the skill gap which prevails between the requirements of the industry and the resources of the labor market.
Most of the current IT companies are not ready for this change, because either the workforce is not trainable due to other resource constraints, or the companies don’t have enough skilled manpower to upgrade the skills of the workforce. However, NASSCOM has started promoting the awareness of this issue and providing the training required. The current level of skillset available in the market is not enough for the Indian IT sector to progress to the next level but this isn’t stopping the expectations from clients changing and heightening. While our engineers have the technical knowledge and capabilities, the approach for practical application is lacking. As the talent which we’ve got is not what is being sought, it’s resulting in the mass layoffs around the industry.
Automation is another big factor to which these mass layoffs are being attributed to. It is evident that automation is entering with fast pace in the Indian IT sector, and humans have to be aware. It becomes even a greater threat than it really is, because this phenomenon is not really buzzing around anymore; instead it is silently spreading its wings. In the nuanced stage of automation, people understood it to be a progressive thing, but did not see the future potential that this word held. Now automation is moving with such speed that a lot of human work is done by machines, and thus people are becoming redundant. Davos executives predict that by the year 2025 robots will take the place of human bosses.
Now is the time when humans need to upgrade their skills and identify the value that they add to their work, their organization, and thus to the whole of IT sector in general. Introspection about value addition is required to be asked by every person in the IT industry. To keep up with these changing technologies, people need to upgrade their skills such that it adds value; and thus prevent themselves or their job from becoming redundant at the hands of artificial intelligence and machine learning. The situation is such that the technologies are being upgraded every six months, and thus the companies need people who can adapt to these upgradations. IT companies are now looking for people who already possess these new skills, as they themselves don’t have enough capabilities to train people on these.
As a result of the aforementioned advancements, the main reasons IT companies are laying off employees is to either replace them with automation or replace them with people who possess the talent of working along with this automation. Thus the automation is coming out of need of quality.
This dire need which is bringing in automation is a result of the change happening in the overall work process of the IT projects. The big companies are themselves bringing in automation. Owing to the increase in client pressure, increasing competition, quality requirements, customer awareness, and decrease in leniency, companies are moving towards agile and scrum projects. Also, the concept of bench is disappearing and pressure of negotiations is increasing. Even these factors are attributable to the mass layoffs. Moreover, these companies are going for mergers and acquisitions with the help of which they show top line growth, which is not actual sales or revenue growth. To fuel this process of buying revenues, workforces are being depleted.
Bringing changes in the culture, society and orientation towards the current trends and academic system takes time. A change in skills is required as the time is running out. The situation put simply is a matter of excess and inadequate supply, to an ever growing demand. So now more than ever, it’s a classic case of Perform or Perish.
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