Lay-off blues and prospects for Indian IT

Firing scare of recent weeks will subside as people find progressive firms employing more talent

The expected has happened. After a busy results season, more questions have been raised and answers are still being sought. Will the protectionism and visa restriction noises in key customer countries put a spanner in the works for revenue growth? Will digital transformation priorities of clients everywhere lead to completely new organisation designs for service providers and a perilous transition causing a dent to both revenues and profits? Will the inexorable drive towards automation result in significant job losses with the large roles in coding, applications and infrastructure support and testing evaporating in the next year and more? And finally, will the morale of IT folks, so long used to being the most sought after professions in the country, take a big hit and drive top performers away from the industry?

The first question is easily addressed. Visa system overhaul in the US has been long overdue and the directive by President Trump to review the H1-B visa programme to ensure that it is used for what it was intended in the first place — to bring skilled workers into the US — is quite accurate. The hype and hoopla reported in the CBS show a few weeks ago that the programme has been misused to bring cheap labour to the US to replace high paying American jobs is not really accurate and based on very selective data, but there is hope that the visa review as and when it happens will replace the lottery system with some guidelines that do not come in the way of free movement of skilled personnel, which is vital not just for project continuity but also for the continuing competitiveness of the American corporate sector. The same holds true for other countries like the UK, Australia and Singapore where similar protectionist noises have been heard.

Having said that, it is automation more than visas which presents the bigger challenge to continuing high employment in the IT and business process management industry. The large-scale deployment of engineers in programming, application and infrastructure support and testing services can certainly be slowed and some jobs lost as many of these processes can be taken over by robotic process automation, smart bots and artificial intelligence. It may not be surprising to find a process that is today managed by five hundred people handled very efficiently a year from now by a dozen talented and highly skilled people supported by tens of smart bots. Automation will also replace client jobs in manufacturing, banking, insurance claim processing and health care administration to name just a few, which may actually present an opportunity for visionary business process management firms to lead the charge towards process optimisation using technology and garner higher market share with more intelligence and less people.

The overall challenge of customers embracing digital transformation will, of course, be more of a new opportunity for smart companies who are able to embrace the new agile development methodologies and partner clients in the transition. Deeper understanding of the domain, the ability to sell to operations and marketing heads rather than just IT and the capability to simultaneously address business model innovation, business process reengineering and digital culture building will be the characteristics of the new age IT services firm. They will bring with them an ecosystem of partners and start-up firms and deliver the value that future clients will seek, which should hopefully create two lakh and more jobs in the industry and the ecosystem in the next few years for the highly skilled.

Anecdotally maybe, but the results of HCL Technologies that were almost the last lot of the top tier companies to come in for the quarter provide an opportunity to be optimistic with at least one company clearly showing the benefits of a thoughtful transformation. Year-on-year revenue growth in constant currency of 13.7 per cent, which is 50 per cent higher than the growth reported by the peer group (TCS, Infy and Wipro) with sequential quarter growth of 3.8 per cent far in excess of the flat to marginal growth reported by the others, should in itself be a reason to cheer. But the commentary that accompanied the results is worth analysing. The company reports that the group of services which it calls Mode 2 and Mode 3 offerings — cloud, products, platforms, Internet of Things and security — grew 30.9 per cent year-on-year and even traditional clients have started consuming these services from the provider. Automation has also helped the company to create new differentiation in new deals and while this has not been called out, it should also enable profitability of deals to improve!

The talent scare that has been seen in recent weeks with the reports of mass layoffs will settle down once people find that progressive companies are actually employing more talented people. The need for up-skilling is of course becoming urgent and many visionary start-ups are embracing artificial intelligence and deep learning tools to create self-managed learning platforms, a case of AI becoming the hero rather than the villain in the new IT industry story that is unfolding before our eyes. To sum it up, it’s time for CEOs to demonstrate that the word CEO stands for Clairvoyant and Evangelistic Optimists and embrace the new ideas and tools needed to lead their organisations to a new level of capability and success!

The author is founder and chairman of 5F World. Email: Ganeshn@5FWorld.com