India’s information technology services companies may lay-off nearly 30,000 to 40,000 middle-level employees this year as growth slows down, IT industry veteran T V Mohandas Pai said Monday. The former Chief Financial Officer of IT major Infosys Ltd said that these job losses come as a once-in-five-years normal phenomenon with the maturing of the industry.
“As in all sectors in the West, in India too when a sector matures so many people will be there in the middle level who will not be adding value to the salary they get,” Pai said while talking to media.
“Promotions are okay when companies are growing fast but when it slows down, people getting fat salaries will aggregate at the higher level, prompting companies to periodically reset their pyramids, and lay-off people,” he said.
“It’s going to happen again and again and again every five years,” said Pai, Chairman of Aarin Capital and Manipal Global Education Services said.
When asked about the number of mid-level staff who would lose their jobs, Pai said, “All across industry, maybe 30,000 to 40,000 in a year.” He also claimed that about 80 per cent of those who lose jobs would have employment opportunities in industries in general if they are specialists.
Several IT services companies are cutting mid-level jobs to reduce expensive resources due to additional cost pressures. This move is an attempt to scale down expenditure by replacing expensive workforce with more base level staff.
The mid-level employees who come with more than a decade of experience constitute nearly 20 per cent of India’s tech workforce totalling around 6 lakh, according to a report by The Economic Times. Recently, Infosys’ mentioned about its plans to lay-off over 10,000 of its employees in the associate and mid-level positions.
Similarly, IT major Cognizant will cut around 7,000 jobs in the next few quarters as part of strategic restructuring affecting another 6,000 employees. Capgemini, a French multinational corporation with a massive workforce in India has also laid off nearly 500 employees. The company blamed the slow down in business as the reason for lay-offs.
