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Why IT giants are cutting jobs at mid, senior levels

Besides increasing their fresher's intake, IT giants are also aggressively localising their workforce in the US, from where they draw at least 65 per cent of total revenue

Kanishka Gupta  |  New Delhi 

India’s sector is going through a tough phase. As a matter of fact, many tech giants are looking to layoff almost 5-8 per cent of their employees in the coming quarters. However, this wave of layoffs will hit the mid-senior employees hardest.

What could be the reason?

Sector experts say rising pressure on margins owing to price discounts on the core business, increased hiring in the US and the emergence of new technology areas are key reasons for such cost cutting.

In view of the existing crisis, Kris Lakshmikanth, founder-head at executive search firm Head Hunters India spill the beans about the possible steps by the IT firms, in order to sustain in the crisis. He said, “It (reduction of personnel) is happening across all tier-I IT services Employees in the senior project manager or delivery manager kind of roles, where the annual salary range is Rs 20-40 lakh, are facing the maximum risk.

He added, “Typically, a large company is likely to reduce 10,000-20,000 people or 5 to 8 per cent of total employee count in phases.”

However, this has already begun in like Cognizant, which has already announced to reduce 12,000 staffers in the next few quarters.

While explaining the reason behind this major move, the Global Chief Executive of Cognizant, Brian Humphries said in an interaction, “What we are trying to do is to get back to the employee pyramid which has been eroded in the recent past. We will hire more fresh graduates and are increasing our freshers’ intake by 30 per cent over last year. So, we are getting the pyramid right, with less middle and senior management.”

The US-headquartered entity has a little more than 70 per cent of its employees in India and it is eyeing a net cost saving of $350-400 million from various cost optimisations.

As mentioned, the emergence of new technologies has also created a demand for the freshers. To this, Lakshmikanth of Head Hunters India said, “Senior managers on the delivery side of the business and (doing) less interface with clients are the vulnerable lot in the current situation. Top management is seeing them as redundant, due to their less familiarity with new-age technologies.”

Following this, in the first six months of FY20, the IT services space saw a net addition of...

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First Published: Mon, November 11 2019. 13:30 IST