What is the reason behind the layoffs in IT firms in India?

This was a question that came to me from an online forum. Expanding on it, the person asked: Is it related to the H-1B visa, or some other reason? What impact will this have? My response follows


Years ago, I worked for Infosys and at that time, we had an "assigned curve" based appraisal system. I think it was called ‘CRR’ (Comparative Relative Ranking) where about
  • 5% a pool of employees would get an A+
  • Next 5% would get an A
  • Another 50% would get a B (or B+)
  • Another 20% would get a B-
  • Remaining 20% would get a C (or Performance Improvement Plan – PIP)
The company had about 30-40,000 employees. At any time, few hundred employees would be under the PIP.  Many who got a ‘C’ during a cycle, strived to work hard and improve and some folks banded into PIP for two cycles in a row were asked to ‘seek other opportunities.’

No drama. No news.
Of course, the Indian IT sector was booming and many employees graded -rightly or wrongly – into the bottom rungs would voluntarily find other opportunities and resign much before being told. This was done unceremoniously, without a lot of drama.

Image result for layoff free clipart
Fast forward to current day.
  • Large software service companies employ nearly 200,000 people each. The rate of voluntary attrition is at historically low percentages.
  • Assuming some sort of a bell-curve grading continues, and companies expect 5-10% of the bottom-rung people to ‘voluntarily’ leave, we are still looking at 10-20,000 people (each) leaving. 
  • 10-20,000 people from each of the big-5 or 6 players coming into the market is a lot of churn to handle, even at the best of times.
  • The global software services market has slowed down. Most of the large software-service firms are projecting slower yearly growth.
  • Thanks to Trump’s Executive actions, Indian firms are promising to hire tens of thousands of American workers.
  • One could include other factors like increased automation and productivity gains that are being touted by IT leaders.
  • Factor in the slowdown in American work-visa (H1) issuance, protectionism in Australia, England and elsewhere that lessens global mobility of people. (2017 is not likely to see as many Indian techies moving abroad)

The media is always looking for headlines. “'Indian IT firmsto layoff up to 2 lakh engineers annually for next 3 years” is exactly the kind of headline that is bound to go viral. Simple economics at work here (more views and readership = greater advert revenue).

The stories are focused ‘layoffs’ which are just one part of the equation. They are missing the big picture – a tectonic shift in the OffshoringIT Services !


A sampling of other headlines
(Repost from mohanbabuk.com )

Comments

Post a Comment

Popular posts from this blog

Man accused of groping woman in Bangalore metro claims he did not intend to touch her, but accidentally did so while attempting to pickpocket

Image
Bengaluru | December 9: A techie claims she was groped by a man on the Namma Metro Train while she was alighting at the Metro on  Thursday . She immediately raised an alarm and the security managed to nab the accused.  On  Thursday  morning, a 22-year-old techie took a Metro from Rajajinagar station to reach her office. While she was stepping out of the metro to switch lines at Nadaprabhu Kempegowda Metro Station, a man touched her inappropriately from behind. She got down and screamed.  The accused hopped onto an escalator to flee the spot but the alert security managed to apprehend him.  They subsequently handed him over to the police. Preliminary investigations indicated that the man had a history of offences, primarily in theft cases.  The accused has been identified as 30-year-old Lokesh who works in the catering industry.   He had been previously arrested by officers from the same police station for a theft-related  incident.  The man claimed that he did not intend to touch the w
Read more

Lessons from the story about Bengaluru Techie being extorted by rogue cops - Use social media judiciously to help those in need

Image
Lessons from the story about Bangalore Techie being extorted - Let’s use social media judiciously to help those in need I was fascinated to see a thread of complaint posted by @vpatilav , a 22 year old intern from Himachal Pradesh who tweeted about being extorted by a couple of cops. His Twitter thread explained how he was illegally detained and extorted by cops while returning home after a late-night shift. The two cops on night duty allegedly planted a small twig of ganja (marijuana) in the youth’s bag and threatened to implicate him in a drug related case. They asked for cash in return for ‘letting him go.’ The techie paid them about Rs 2,500 before he could walk away. The distraught techie took to social media the next day and the story blew up on Reddit (thread) and elsewhere.  What was intriguing was that  @vpatilav , abruptly deleted the thread saying “Police was looking into the matter.” This led to speculation that he was being harassed for “falsely” accusing cops. Dear
Read more

Checklist: What to do after death of a Parent or loved one?

Image
With a death in the family, survivors may have to come to grips with the stark reality: how to move forward after the death. While the grieving process can take time, one also must address several documentation, paperwork and other formalities. Here are a few things that you will have to follow up on: To Do Immediately After Someone Dies Inform loved ones, family and friends Arrange for a funeral - depending on your custom and current regulations and wishes of the deceased, you will have to plan for the final rites Plan for after death ceremonies - this will depend on your customs (e.g  After death ceremonies – Brahmin Iyer ) Apply for a  death certificate . This is the most important legal step and may be a two-step process The hospital, crematorium or burial ground officials may issue a letter/document with the name of deceased and cause of death.  The letter/document needs to be submitted to the local municipal/corporation office that will ‘record’ the death and issue an ‘official’
Read more