Industry experts believe that of the more than 300K tech jobs that were lost to global economic challenges, more than a third could land in India
Ever since the macroeconomic headwinds took the North American and European economies on a downward spiral, technology jobs have been on the line. As many as 300,000 such jobs were said to be snipped away by both large and small enterprises in these geographies. Now, there is a view gaining ground that over a third of these jobs could land in outsourcing hubs.
The currency arbitrage process appears to be back in business as some industry experts we spoke to believe that many of the technology companies such as Tata Consultancy Services, Wipro, Infosys and others could benefit from the large scale layoffs. Some expect between 30% and 40% of such jobs to land in India while others are more circumspect.
There could be an immediate impact in the wake of layoffs announced by global Big Tech companies such as Amazon, Microsoft, Google, Meta and Salesforce to take a few examples. The question though remains whether these companies would jiggle their workforce to an extent where some of the high-cost staff fall off and can be replaced by lower cost ones.
Data suggests hiring sentiments are back
“In fact, we see early trends of some of this happening. As companies realign with the modern realities of slow growth and static revenues, we expect to see some of the mid-tier positions giving way to those at lower levels. And these could be filled by fresh recruitments as well as smart utilization of bench strength,” says a senior executive of a Bangalore-based headhunter.
Meanwhile, a report published in the ET quotes data from Xpheno to suggest that the Indian workforce in big tech companies account for around 17% of their global staff strength. This grew by 35% in the past 12 months as against a 12% growth in headcount across the world. Also, the BFSI vertical saw the highest rate of growth at 21%.
Though companies are facing a steady slow down across most of the developed world, they continue to aspire to maintain their profitability. For this, the companies require to keep jobs to deliver the desired outcomes for their clients and it doesn’t really matter if the jobs are in the local industry or outsourced to another geography.
IT industry body Nasscom says India has more than 2700 global capability centers, with over 65% of them being a part of large enterprises based in the United States. This cohort reportedly added 150,000 employees in just over a year’s time. And there could be more of the same coming their way.
The arbitrage model or is it different now?
In fact this could well be a smart way to maximize profitability even during a slump. By shifting some part of their operations into India and other offshoring hubs, big enterprises can get their numbers to look better and thereby keep the stock market interest going strong. By doing so, they can hope to be ready for an upswing that is expected once the inflation pressures go.
In fact, the naysayers are of the opinion that given the fast-depleting labor arbitrage between India and other countries, the shift from developed countries may happen to geographies that provide cheaper options. Of course, it remains to be seen how marketing and sales teams of India’s big IT companies manage to compete on the rates by selling India’s expertise.
When we reached out to some of the top IT companies as well as the consulting majors operating in India, the one thing that came out is that hiring was indeed continuing in India at just about the normal pace. In fact, some said that the pace of hiring had upped over the last month or so, even as layoffs continued overseas and in some cases in India too.
There is also direct action among these big companies to reskill or upskill their teams so that they are ready to take over roles when the jobs come their way. In addition, companies at the college campuses seek freshers while also keeping their eyes peeled for later hirings. Entry level roles with three months of skilling appear to be the flavor of the season.