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Friday, May 12, 2017

Indian IT Workers Brace For Bloodbath As Industry Veers Towards Jobless Growth

It seems like the heydays of tech jobs in India may be getting over sooner than what many will have you believe.

Nearly all large IT employers in India such as Infosys, Wipro, Tech Mahindra and Cognizant, are in the process of laying off hundreds of employees, according to media reports. And several more have plans to retrench as many as 58,000 engineers , or over four per cent of their combined workforce in the next few months, Mint reported.


Recent job cuts include Cognizant laying off over 6,000 staff; Infosys letting go of 1,000; Tech Mahindra cutting 1,500 jobs, and Wipro slashing 600 positions, according to reports.

While many IT companies are attributing the recent cuts to routine annual culls, several long-term and irreversible industry trends seem to at play that don't bode well for techies, even those with experience to boot.

And it isn't just nationalist agendas and visa crackdowns that are a cause for worry. Rapid adoption of automation -- such as the use of artificial intelligence (AI) bots -- that can replace even advanced tech jobs are pushing Indian techies towards a dangerously uncertain future.

Jobless growth
After years of steady, consistent growth, Indian IT companies, in the past few years, have faced massive competitive pressures, pushing many of them to cut costs.

They have done so in part by deploying automation to provide faster and more efficient services to their overseas customers. Many of them -- including Wipro and Infosys -- have already deployed AI tools that can do jobs that have been traditionally been done by engineers.

According to HfS Research, India stands to lose 640,000 low-skilled jobs by 2021, a decrease of 28 per cent jobs because of large-scale automation of non-customer facing roles such as "back office" processing and IT support work.

Indian IT companies are also up against slowing demand from large customers for traditional approaches to IT services as several industries undertake large-scale shifts towards digital services and cloud -- technologies that will require new skills. Additionally, an uncertain regulatory climate in the US and Europe has worsened the existing demand, particularly from deep-pocketed health care customers as they await legislative changes.

Earlier this year, for the first time in 25 years, IT industry body Nasscom postponed issuing a growth guidance, citing an uncertain regulatory climate and macroeconomic outlook.

The picture on the job front is much bleaker. According to Nasscom, there could be a 20-25 per cent reduction in jobs over the next three years. It also said that while the industry grew by 8.6 per cent over the past fiscal, job growth was significantly lower at just about five per cent. That shows that IT industry growth is increasingly becoming a jobless-driven proposition.

Silicon Valley-based chatbots maker Gupshup's Founder and CEO Beerud Sheth, told INNLIVE in an earlier interview that Indian BPO companies, for instance, could be "severely affected" by AI as cheaper and more efficient bots can do the jobs traditionally done by humans.

"IT companies will have to think hard about re-skilling all these people into more value-added roles," he said, adding that a number of roles ranging from call centre services to complex accounting tasks, legal work, are already being automated. Gupshup, which provides customer service bots to companies, is also seeing a huge demand from banking and financial services industry, but also increasingly from consumer goods companies and retailers.

Toeing the line
The recent crackdown by US President Donald Trump's on H1-B visas –- work visas used widely by tech companies –- has also come as a double whammy.

Earlier this year, even as several Silicon Valley tech CEOs lined up to protest the anti-immigrant moves in the US, heads of Indian IT companies have been remarkably silent on the issue, and many of them have instead been keen to impress how their focus has always been on ultimately hiring Americans for their jobs.

HCL Technologies President and CEO C Vijayakumar told recently the company's business model is "very resilient to any geographic and immigration challenges."

"Actually I am really surprised that some of the players are talking about adding people in the US now. It is something which we recognised 7-8 years back," he said, adding that the company has 12 delivery centres in the US, employing 12,000 people with more than 55 per cent of them being locals.

While its rival Wipro has said it is aiming to boost its local hiring in the U.S. and intends to have 50 per cent of its workforce employed by U.S. locals by Q1 FY18.

Skills mismatch or much worse?
According to global consultancy firm McKinsey, almost half of the workforce at Indian IT services companies will become "irrelevant" in the three to four years, requiring them to retrain a majority of their workforce to meet the demand for new digital services. The $150 billion Indian IT industry is currently estimated to employ close to 10 million people.

To be sure, many IT companies have also emphasised the need to re-skill employees. However, the pace of re-skilling raises a larger question about employability of Indian tech workers.

French technology company Capgemini, which employs 1 lakh employees in India, is aiming at retraining each of its employees in digital skills by 2018. "We will touch each of our employee as part of the training programme with new skills in digital and cloud. The idea is to make them future-ready," Capgemni India COO Ashwin Yardi told.

Hitesh Oberoi, MD and CEO, Info Edge, which operates Naukri.com recently told INNLIVE that many IT companies are scaling back on campus hiring because of "unpredictable demand" and instead choosing to hire "from the market" – people who already have those skills.

According to him, just like industrial revolution and shift to computerisation displaced workers but eventually led to demand in new skills, the current shift in the industry is not all bad news.

"Automation and robotics will likely create hundreds and thousands of jobs but the skills required will be different," Oberoi said, emphasizing the need for professionals to constantly update their skills.

"If you have been coding on mainframe and you don't adapt to the new world and new technologies, you have a problem," Oberoi said.

However, not everyone shares in his optimism. Late last year, Vineet Nayyar, vice-chairman, Tech Mahindra India while addressing the World Economic Forum's India Summit said that it isn't just IT jobs but advances in technology could wipe out a whole range of mid-career jobs from accounting, legal to medical professions, both in India and abroad, leading ultimately to much greater divide between the rich and poor.

"You are going to see the middle class jobs going away. That is the blacker side of technology and is already happening," he said. "If technology continues at the same pace, you are going to see a huge social upheaval."
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