Tough times for Indian IT: 5 things you should know about ongoing mass layoffs

Some say that layoffs are occurring on a scale not seen since the 2008-10 downturn.

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There’s a powerful tension haunting the IT sector in India.

Reports of large-scale layoffs by several IT majors including Infosys, Wipro, Cognizant and Tech Mahindra have been doing the rounds.

According to some industry experts, a focus on automation and slow growth of the sector, along with a mix of other factors, have resulted in this wave of retrenchment.

Here are five things you should know about the mass layoffs in the Indian IT sector.

How many jobs are at stake?

According to media reports, a staggering 56,000 techies could be fired this year.

Seven of the world's major IT companies including Infosys, Wipro, Tech Mahindra, HCL, Cognizant, Cap Gemini and DXC Technologies, employ a total of 1.24 million people and have plans to give pink slips to 4.5% of their workforce in 2017, The Mint reported.

The current layoffs by the IT firms are on a "scale not seen since the 2008-10 downturn", The Economic Times stated.

While media reports paint a worrying picture, however, most organisations have been downplaying the job cuts as routine annual exits based on performance.

Infosys defers salary hikes

India's second-largest software exporter, Infosys, has deferred salary hikes of its employees till July, The Economic Times reported.

Salary hikes are effective from April, and some of the senior employees may have to wait even longer than July to get their raise.

The company added that there would be no "planned layoffs". “As has been the case in the past, we will primarily see some performance-based exits,” ET reported an Infosys representative as saying.

Just recently, Infosys had said that it had plans to soon give the pink slip to an unspecified number of its techies for "non-performance". This came over a week after the firm announced, on May 2, that it would hire 10,000 Americans in the US.

"A continued low feedback on performance could lead to certain performance actions, including separation of an individual," Infosys said in a statement.

Though the firm declined to mention how many pink slips it would hand out, sources said they could be in hundreds at middle and senior levels, working in its development centres across the country, and a few in its overseas offices or subsidiaries.

Techies outrage

In the last week, groups representing Indian techies have submitted petitions to Labour Commissioners in Tamil Nadu and Hyderabad alleging forced resignation by employees.

Telangana Information Technology Association President Sundeep Kumar Makthala told Telangana Today that some companies give employees with poor performance ratings the option to voluntary resign or be fired. Since being fired will affect their resume, employees choose the former. Makthala said that in this way the company can show voluntary attrition and not layoffs.

Other experts told the publication that the scenario is reflective not of a recession but of "technological disruption", and that the majority of lay-offs are among mid-level employees who are seen as resistant to change.

Many techies are taking to social media to share their woes.

A Facebook page called Infosys Confessions - ICCA has been receiving posts from many "fired" employees.

"Recently got fired from cognizant. i had around 5 years of experience. now i am just broke. i was a "under performer," wrote one person.

Another said, "I also got fired from Cognizant. I felt shattered. I have 9+ years of experience and at this experience, I see very less/no opportunities."

Business Standard reported that even professionals who not belonging to the groups affected by these developments are wary of jobs at IT firms because of the lack of job security.

To hire, not fire, says TCS

Bucking the trend, global software major Tata Consultancy Services (TCS) has ruled out laying-off employees in the near future and instead plans to create more jobs.

"No, certainly no," Rajesh Gopinathan, CEO and MD of TCS, told IANS on Thursday when asked if there were any plans of laying-off employees or downsizing as other big players in India's IT sector have said they would do.

"We are here to create jobs, not to downsize," he asserted.

Cognizant meets Telangana Labour Department over layoff charges

The Telangana Labour Department held a meeting on Thursday with officials of the US IT firm Cognizant Technology Solutions (CTS) seeking an explanation about allegations of "illegal termination" leveled by "affected" employees.

Joint Commissioner (labour), R Chandra Sekharam, told PTI that eight employees had approached the department with their complaint, along with representatives of employees unions.



"Only three people had resigned. They are under notice, while rest of the (five) people, they are apprehensive about their termination. Management sought two weeks’ time to respond on each case. They took the complete list and said they will come back with the status. A meeting will be held after two weeks... May 26," he said.

The meeting came after the Hyderabad chapter of a group called Forum for IT Employees (FITE) filed a complaint with the Labour Commissioner, accusing Cognizant of “illegally terminating” employees.

With IANS inputs