Why Indian IT's job target is under cloud

India’s information technology (IT) industry could significantly fall short of its targeted generation of 130,000-150,000 new jobs this year as large companies such as Cognizant, Infosys, and Tech Mahindra (TechM) shed people to embrace automation and focus on productivity of the workforce.

The National Association of Software and Services Companies (Nasscom), the software industry lobby, had estimated that 130,000-150,000 jobs would be created even as it forecast a lower growth of 7-8 per cent this year.

“We don’t give guidance for employment, but we did give some estimates. There it could be a question,” said President R Chandrashekhar in an interview. “For revenue forecast of 7-8 per cent done in June, we will be very much on target.”

US-based IT services firm Cognizant shed 5,100 jobs in the past six months, while Infosys has seen a workforce drop of 1,527 people in the same period. TechM, the fifth-largest software services firm, had shed 2,958 jobs as it optimised workforce to improve margins.

“We are looking at increasing productivity through a number of measures and relative reduction of manpower. As we go forward, the same quantum of work with lesser manpower is the goal,” said Vineet Nayyar, TechM Vice-Chairman, in an interview. 

Both Wipro and HCL Tech added people during the period. But the pace of job generation has slowed as IT firms look at automation to do testing and first and second-level maintenance jobs, as customers demand higher productivity for lower costs.

The IT industry is facing its toughest time in a decade. The technology shift is forcing large corporate houses and banks to cut IT budgets on traditional outsourcing and focus on digital and cloud, where they look to get more value for the money they spend. 

“Big changes that have happened is a onetime correction because of too many disruptions, and companies had to eliminate their bench overnight, shift to digital, and get their people skills,” said Chandrashekhar.

At the same time, global customers who are investing in newer areas such as digital, analytics and cloud are building their own teams in India as against outsourcing to large Indian and global players.

“Since the problem is that of skills in the US, what we are seeing (of global companies) is either they outsource it and the outsourced company, whether it is TCS, Infosys, IBM or Accenture, offshores it to India. For strategic reasons, they want to keep the technology with themselves because the skill problem still prevails there. They are setting up captives,” said Chandrashekhar.