Digital bloodbath may lead to more IT layoffs

The Indian tech sector has already started reporting a large number of casualties at senior level due to digital mainstreaming. Worse, more job losses are on the anvil. Top HR sources say many league players are expected to join Cognizant and announce mass exits of senior talent in the next couple of quarters.

Cognizant has laid off some 200 senior employees at the director level and above this year in a bid to align its talent pool to the newer digital requirements. The employees have been given a severance payout of four months. The process would cost the company a sum of $35 million, as per a recent report. The industry won’t be surprised if the next batch of “involuntary senior IT retirees” came from lead player TCS, a top-heavy firm, said a senior source at the company.

“All lead IT firms will be forced to lay off some percentage of their senior staff as all won’t be able to understand the digital play. So, the digital bloodbath is expected to continue for a year and companies are already letting people go in small batches so that the morale impact and media attention are minimised,’’ said a senior HR executive at a top IT firm on condition of anonymity.
So, it’s critical for Indian IT to readjust its people pyramids to maintain the tempo and momentum of growth in its digital transformation journey.

Indian tech vendors need to readjust their people pyramids, flatten the big belly bulge and start hiring people with creative skills, design thinking, story-telling ability, hard core engineering knowledge and domain expertise to be successful in the digital play

Hansa Iyengar, senior analyst, Advanced Digital Services at Ovum, a London-based Indian tech firm, said IT firms are trying to turn the people pyramid upside-down (prioritising highly skilled resources over hiring low-level resources), but there is a mid/senior level bulge that needs to be trimmed down. This bulge consists of middle-level executives who are entrenched in the company, but have lost sight of the techie roots and are not as conducive to reskilling compared to people lower in the rungs.

“Digital is emerging as a mainstream option and future jobs are expected in this arena. Everything, tools and platform, is going to be different,’’ warned Iyengar.

Peter Bendor-Samuel, CEO of Dallas-based Everest Group, said, “I see significant disruption to the existing workforce with the new hires often coming on shore, and the skill sets being different including hard core engineering and industry domain focused.’’

Customers want IT firms to be equipped with a wide variety of new capabilities around creative skills, design thinking, story-telling, RPA (robotic process automation), mobility, data science, machine learning, data analytics, applied mathematics, AI, robotics, ethnography, UI (user interface) design, and communication.

BS Murthy, CEO at Leadership Capital, a leading tech hirer based out of Bangalore, said every enterprise application is now on the cloud. Legacy side of the business and people working on it are becoming irrelevant and non-billable. IT infrastructure has seen a massive deployment of automation. Somebody who is working on legacy applications for too long has truly become redundant.

“All the roles that are not customer facing, not consulting, not solution architecting, not pre-selling and not business developing are going away, that means a large number of project managers, programme managers and delivery heads are going to be under the axe. A large number of techies who entered job market during late ‘80s and early ‘90s are getting phased out or retired involuntarily. That’s the sense I get based on job enquiries,’’ added Murthy.