Big IT Firm To Lay-off 56,000 Employees Will Be A Big Blow on Growing Unemployment

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IT companies are currently wrestling with the fundamental change in business model. (Livemint)
With high levels of unemployment and vulnerable employment on the rise, the work in India is still facing tremendous challenges in terms of job creation and sustainability, warns a new Labour Bureau of India.

Unemployment rate in India has gone up to a five-year high of 5 per cent in 2015-16, with the figure significantly higher at 8.7 per cent for women as compared to 4.3 per cent for men, says a report by Labour Bureau. The figures could be an alarm bell for BJP-ruled government at the Centre, which has taken a series of steps such as ‘Make in India’ to create jobs for inclusive growth in the country.

Still unemployment in India is projected to witness marginal increase between 2017 and 2018, signalling stagnation in job creation in the country, according to a UN labour report.

IT companies are currently wrestling with the fundamental change in business model. (Livemint)

Job creation in India is not expected to pick up pace in 2017 and 2018 as unemployment rises slightly, representing a snail pace in percentage terms. According to the sources ,the Demonetisaion led a huge impact on jobs in India. 35% jobs losses in first 34 days,which seems to be the more loss of jobs than creation of jobs. To many it may seem like a bold move by a confident Prime Minister, but to others, it spelt nothing but doom.

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As we have witnessed many IT firms lay off employees.Whether it may be cognizant,wipro, infosys and many small scale IT companies.

IT companies in India are in the midst of the industry’s largest reduction drive, with seven of the biggest IT firms planning to ask at least 56,000 engineers to leave this year.

Unemployment concept in tag cloud

The numbers are just double the employees laid off in the last year.The companies include both Indian and multinational firms with a large footprint in India.The seven companies—Infosys Ltd, Wipro Ltd, Tech Mahindra Ltd, HCL Technologies Ltd, US-based Cognizant Technology Solutions Corp. and DXC Technology Co., and France-based Cap Gemini SA—and which together employ 1.24 million people, plan to let go of 4.5% of their workforce in 2017.

In the past, between 1% and 1.5% of a large Indian IT firm’s employees would be asked to leave every year on account of poor performance. The number was 3% for foreign companies with large Indian operations. This year, the range is likely to be 2-6% across Indian and foreign companies.At the heart of the problem is the fundamental change in the business model that Indian IT companies are wrestling with. It’s as if the world has become digital, and they haven’t (at least, not enough).
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Poor growth and pressure on profitability has prompted most companies to save on costs. In the year ended March 2017, for the first time since 2009-10, TCS, Infosys and Wipro grew slower than industry body Nasscom’s 8.6% growth forecast in constant currency terms, even as profitability of all the companies declined.Trump’s protectionist policies mean more Indian IT companies are asking Indian H-1B Visa holders to return home.Infosys has already announced that it plans to hire 10,000 US citizens over the next two years.
Wipro has hired over 2,800 Americans over the last 18 months and expects half of its total workforce in the US to be locals by the end of June 2017.The increase in dissatisfaction among IT techies in India can directly be attributed to the widespread layoffs seen this quarter and promises by companies like Infosys and Cognizant to hire more American workers amid the H1-B visa issue.
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