Cognizant layoffs: Gloom continues, jobs in tech and IT companies dry up
Cognizant is not the only company, the past few months saw layoff announcements at some of the world’s best companies.business Updated: Mar 22, 2017 16:07 IST
Cognizant, the New Jersey-headquartered software services company with most of its operations in Chennai, is likely to lay off 6,000-10,000 “ redundant and non-performing” employees.
The retrenchments are reportedly a part of the appraisal process, as digitisation and automation become the new normal for Indian IT firms; and Cognizant is not different from Infosys, Wipro and TCS.
The way IT services are being delivered is changing. Add to that, America’s growing protectionism is making offshore business difficult. Clients want a higher degree of automation, and digital services have already started contributing to 20% of IT services’ revenue.
According to a report, the hiring process for 2017 is likely to be slow with IT majors expected to cut by 40% the engineering graduates they planned to hire. In fact, IT sector veteran Mohandas Pai, in December last year, had said that 20 crore middle-class youth would have no jobs or less jobs by 2025 due to increasing automation and improvement in technology.
Apart from the IT sector, the past few months saw layoff announcements at some of the world’s best tech companies.
Cisco announced a reduction of 7% of its global workforce in 2017, while IBM revealed plans of 5000 job cuts, both to reinvest money in priority areas such as internet of things and cloud computing.
Microsoft, on the other hand, decided to cut over 2800 jobs this year, as it planned to wind up its smartphone business.
Darlings no more?
The Indian startup sector is also bracing up for a harsh 2017, with news of layoffs at around half-a-dozen companies. Salary cuts and pink slips --- the story is same in Snapdeal, Craftsvilla, Stayzilla, Yepme, Tolexo among others. Job cuts range from 600 in Snapdeal to 30 in Yepme.
Stiff competition, deep discounts and funds crunch have been the spoilers in the Indian e-commerce party. Before 2016, startups were the darlings of investors. They were born almost every week, everybody wanted to launch a startup, and those who had money wanted to invest in one or the other.
But 2016 saw a series of erosion in valuations of the poster boys of Indian startups. Flipkart’s was the most notable one – from $15 billion down, its valuation dropped to $5.5 billion. Zomato’s got halved to $1 billion. InMobi, which was once considered a Google rival in the digital advertising space, witnessed its key investor SoftBank writing off $200 million of its investment in the company.
“When global competition stepped in, Indian companies went through multiple levels of devaluation – for example in the classic case of Flipkart vs Amazon, Uber vs Ola, and InMobi vs Facebook,” said Sanchit Vir Gogia, chief analyst and founder of Greyhound Research.
Companies, which once picked up graduates from top engineering and management institutes, stopped hiring. Grofers and Flipkart did not take in graduates who were placed during the hiring season, which resulted in a lot of bad blood.
Indian Institutes of Management (IIMs) and Indian Institutes of Technology (IITs) are no more the hotspots for startup hiring; they are now turning to lower level of institutes for hiring at lower salary packages.
Will the gloom continue?
Despite Naukri.com reporting a bump of 15% in hiring in February, compared with January 2017, the job portal’s data showed just a 1% year-on-year job growth.
“We can expect the job market to be volatile for the next few months before it tends to move north again,” V. Suresh, chief sales officer, Naukri.com, said.
Google Trends reflects the growing angst among Indians, as internet search for the word “layoffs” shows a bump in recent days. Experts point out that the March to April period is when employees are generally nervous about the job market, given that this is the increment season.