News & AnalysisNewsletter

Will Layoffs Continue to Dominate 2020 Too?


Global economy didn’t have a happy 2019 and mirroring this dismay Indian enterprises too went through the past twelve months pretty much on tenterhooks. The southward journey of key economic indicators such as GDP and IIP began to manifest in terms of layoffs with businesses proffering reasons ranging from the need to cut costs to investing in automation.

Some time back, we reported the automation-triggered layoffs at the Zomato, the popular restaurant aggregator and food delivery start-up. The incident created a lot of buzz across the country. It was worth the debate, after all! The start-up laid off over 600 employees claiming significant enhancement of their technology products and platforms.

This improvisation reportedly minimized the support-related queries by 50%, leaving several roles redundant and consequently, leading to layoffs. Soon after the incident, Uber made headlines by laying off 350 employees which was its third round in the year. According a report published in the New York Times, the pressure of layoff stemmed from the financial losses.

It was not as though only the services companies were handing out pink slips. The IT industry too fell prey to slowing growth and narrowing margins. Cognizant’s decision of letting go nearly 350 mid-senior professionals who make 80 lacs to 1.2 crores annually hit the headlines. According to a report published in the Economic Times, this was done on the premise of cost reduction and shift in the focus from traditional technology services to the digital technologies.

The report quoted Peter Bendor-Samuel, chief executive at IT advisory and research firm Everest Group to suggest that  the move by Cognizant was aimed to cut costs and improve margins and warned that more such incidents are likely to follow a model of further reorganisation with some additional headcount reduction.

An Aberration or a Trend?

The constant news of layoffs every now and then is certainly horrifying. Living in the perpetual fear of losing your job is no less than one’s worst nightmare coming true and something that the Indian economy hasn’t had to face in many years. When was the last time one saw industrial action by laid off workers and the union formation by IT workers to safeguard their interests?

While many hope the New Year to bring good with it, there is certainly discussion what the coming year is going to be like with respect to the layoffs.

The report of OYO’s reported layoff of 2000 employees across the country and from every operational section such as sales, supply and operations by end of January does not bode well for the services industry in general. The company has been on a growth path of acquiring rooms and spreading to smallest of small cities and towns in India over the past few years. So, one isn’t sure what caused the latest decision? Was it due to the general sluggishness in bookings? Or is it that they had over-hired in the first place and a course correction was ultimately required?

The Economic Times report, quoting an OYO spokesperson, says the layoff will be done basis the “meritocracy-based” performance evaluation programme which tracks the performance of individuals. Of course, what this exactly means and how it would impact those 2000 people whose names figures on the list for pink-slips isn’t yet clear. However, this once again raises the issue of unionization of employees in another sector of industry, much like India had in the 1980s where industry-level trade unions were the norm and political class often used them to push their agenda.

Of course, one may argue that employees too need to be aware of role redundancies and prepare through a combination of upskilling and savings. However, what makes the pill a lot more bitter is that those who were responsible for corporate decisions continue to rule the roost by simply shifting over to another company, mostly at the same salary scales.

All talk of technology and innovation resulting in job losses cannot cut it in a country which boasts of the second largest population in the world with more mouths to feed per family than anywhere else. With India likely to overtake China as the most populous country by 2027, jobless growth and layoffs can only hasten civil strife.

And it is up to the government to bring about schemes that take care of social security while also initiating measures to reduce the rate at which India’s population is growing.

Leave a Response