According to a global placement and coaching firm, multinational companies including several tech giants like Amazon, Meta, Intel and Twitter have been seen announcing mass layoffs in the USA. This could have an impact on India’s export prospects, especially in the Information Technology (IT) sector.
It refers to the temporary or permanent discharge of an employee or workers. Besides the obvious disadvantages of having a reduced workforce, there are three downsides to layoffs.
Firing, hiring and rehiring employees is costly. Firing and hiring employees can cost your business a lot of time and money. You may lose valuable employees permanently. Layoffs can demoralize the company.
Why are layoffs happening on such a large scale?
In fact, the economic slowdown has increased since the pandemic. With inflation rising in most parts of the world, central banks have been scrambling to rein it in by raising rates since March this year to make it more expensive to borrow and consume.
Along with this, the Russia-Ukraine war has also added to this problem. The International Monetary Fund (IMF) has forecast global GDP growth in both 2022 and 2023 as disappointing given the pandemic and the ongoing Russia-Ukraine war Is.
How will this affect the Indian IT industry?
Indian IT services firms are among the largest employers in the organized sector and any global economic trend is bound to have an impact on their growth projections.
The attrition rate of the top two firms, TCS and Infosys, which refers to the number of self-attrition per 100 employees. These rates are still high, meaning there is enough business for the sector to attract employees from competitors.
This will also have an impact on start-ups. The Indian start-up layoff tracker by Inc42 showed that over 15,700 employees were laid off in 2022 given strict funding conditions.
Along with this, there will also be a decline in the consumption of online content. A lower share of Internet users visiting educational websites since the pandemic has been cited as a reason for the decline.
Along with this, it also takes into account the problem of cost reduction. Management takes headcount seriously when they want to cut costs and protect profit margins because they are accountable to investors.
( DIRECTOR – OJAANK IAS )