Insiders predict that anything between 10,000 and 15,000 pink slips are expected to be given in 2017-18, with the brunt likely to be borne by the middle-level management.

As the Indian IT sector goes full-throttle on automation and digitisation, the sprawling IT Park at Hinjewadi in Pune is in a panic over layoffs. Though the IT giants and Nasscom, the industry’s apex body, are in denial mode, analysts predict that nearly a lakh jobs will be lost in the $160 billion industry over this year and next, signalling a crumbling of the world of IT outsourcing.

What happened?

With aggressive automation the way of the future, the Indian IT sector, service-oriented for long, is shifting focus to software product development to produce reliable and highly qualitative enterprise solutions. After Bengaluru, the reverberations of downsizing are being felt acutely across the 2,800-acre Hinjewadi IT Park, which houses all the big guns: Infosys, Wipro, Cognizant, IBM and Tech Mahindra, among others.

Over three lakh people in the city depend on the IT sector for their livelihood. Besides Hinjewadi, Pune is home to more than 800 IT companies of all sizes, besides having two other IT parks at Magarpatta and Kharadi.

The city’s share of IT exports exceeded ₹65,000 crore last fiscal, maintaining a robust 10% year-on-year growth.

How many jobs will go?

Insiders predict that anything between 10,000 and 15,000 pink slips are expected to be given this fiscal, with the brunt likely to be borne by the middle-level management. While youngsters will find it easier to adapt themselves to the situation, mid-level and even senior managers with 10-15 years of experience suddenly find that their skill-sets are obsolete.

The layoffs have been explained away during performance appraisals as ‘routine paring’ of workforces. Yet, the projected retrenchment rate of 2-3% appears sharp when contrasted with the average industry layoff rate in the last few years, which has remained stable under 1.5%.

The Hinjewadi campus is fraught with anxiety, and several mid-level managers have already lost their jobs.

Are visa issues adding to problem?

Apart from political considerations such as U.S. President Donald Trump’s prescription for stringent visa norms and Australia scrapping the 457 visa programme, experts attribute the ‘layoff blitz’ to a dramatically changing Indian technology footprint over the past few years. While outsourcing has been under the scanner of protectionist governments in the U.S. and Australia, Indian IT majors too have been adopting newer technology, automation processes, cloud-computing and other means to reduce the dependency on manpower.

Wipro, TCS and Infosys have all rolled out their artificial intelligence platforms as IT firms increasingly rely on automation with a view to maximising profits. In Pune, as elsewhere, this has led to the jettisoning of the ‘linear growth’ model, where companies traditionally took in employees to generate more revenue.

What is the road ahead?

The immediate response to the layoffs has been a move towards unionising. As retrenchments gather momentum, the Forum for IT Employees (FITE), an organisation set up to fight layoffs in cities like Bengaluru and Chennai, is set to work towards the formation of a formal union in Pune soon.

The Pune-chapter of the FITE has witnessed a spike in registrations on its official website.

However, in the longer term, this impels a dramatic overhaul within India’s IT industry, which has to shift from being a services to a product-oriented one. The layoffs have given entrepreneurship an impetus. A section of IT employees who have been laid off is focussing on launching new product and cloud-based software start-ups in Pune, which is fast emerging as a start-up hub.

Executives within the IT majors refuse to dub the situation a ‘crisis’ as yet. While certainly there will be more layoffs, hiring is expected to pick up after a while to build the new workforce skilled in new technologies.

However, the rapid adoption of AI platforms will create a higher demand for skilled engineers in niche areas, while doing away with entry-level engineers for such generic tasks as coding, back-office maintenance and applications testing.