Job cuts in IT sector likely if biz climate doesn't improve soon: Nasscom

Many of the industry's clients closed their set-ups globally as part of containment measures to check coronavirus. Travel and hospitality, aviation, retail, auto and manufacturing hit the hardest

Indian IT services companies may have to resort to job cuts to ratonalise costs in the short term if the global economy doesn’t improve in the next three quarters, industry body Nasscom has said.

However, companies may be compelled to take this route for survival as the “last option”, given the importance of talent for the industry, Nasscom President Debjani Ghosh said in an interaction. “As economy continues to get impacted, there will be business impact. We have to do cost rationalisation whether we like it or not. So, in the short run, I definitely see some level of impact and I don't know how much it will be. I am hoping that this will be minimal,” said Ghosh.

“If the business doesn't recover in next 6-10 months, there might be situation where there would be some lay-offs…That may be required for survival and to ensure livelihood to millions of people.”

The IT industry is going through tough times, as many clients have been forced to close their establishments globally as part of the containment measures to check the spread of Covid-19. Enterprises in travel and hospitality, aviation, retail, automotive, and manufacturing sectors have been hit the hardest in the past three months. This has led to delays in renewals of new projects to cancellations of ongoing outsourcing projects. Despite this hardship, the Indian IT industry has not resorted to cutting jobs and is currently pursuing other cost optimisation moves. Many of the IT biggies such as TCS, Infosys, HCL Technologies, Wipro, and Tech Mahindra have said that they would continue hiring from college campuses, albeit in a lower number in 2020.

 

 

“In IT business, talent is the most important thing. So, letting talent go is the hardest decision any company can take. As an industry, we take all our efforts to keep our people. We honour our job offers.

Companies are trying all kinds of steps, including reducing salaries (to save jobs),” said Ghosh.
 

Most IT companies are operating on work from home (WFH) mode with more than 90 per cent of their employees are working from remote locations. Despite relaxation in the lockdown norms, Nasscom sees the model to continue for some more time. 

According to the industry body, while around 10 per cent of employees are likely to operate from office by the end of May, as compared to around 5 per cent now, this will be increased to around 15 per cent in June.

The Nasscom president, however, said the industry body doesn’t see WFH as the new operating model. “The future is not going to be WFH. It will be blended model (both work from home and office) for large companies. A lot of romanticisation is happening with respect to WFH but there are a lot of issues that need to be sorted for this model to work,” added Ghosh.