Layoffs plague Indian IT sector as firms struggle to meet modern technology demands

Dive Brief:

The Indian IT industry has laid off 56,000 employees this year, with cuts stemming from changing technology and a tenuous political environment, according to a Quartz report. While it is standard for firms to lay off about 1% of employees each year, some companies laid off between 2% and 6% of their workforce. And many projects reevaluated just show many workers were necessary to complete a job.
Digitization and automation are, in part, to blame, according to the report. Changing technologies made firms in India reevaluate marketable skills and experts with legacy technology experience were laid off, including senior employees. Almost one-third of "low-skilled workers," nearly 700,000 people, in the Indian IT industry could lose their jobs by 2022, according to the report.
Indian firms are also facing the same talent struggles as other businesses across sectors. While automation is expected to increase the total number of jobs available, the highly technical roles require advanced skills and the Indian IT industry does not have a pipeline capable of meeting demand. Currently, only 5% of Indian IT workers are capable of handling high-skilled jobs, according to the report.

Dive Insight:

The Indian tech sector is working to shore up the number of jobs and trying to limit displacement of its workers, but a shaky political environment means the industry has to consider more than just the changing technology landscape.

Two Indian consulting firms, Infosys Limited and Tata Consultancy Services, are consistently the top H-1B employers in the U.S. But under the Trump administration the H-1B program's future is uncertain and visa changes could soon end the rule allowing spouses of H-1B holders to work in the U.S.

In response, some firms are setting up "design hubs" in the U.S. and plan to hire locally to ensure the firms can continue to work in the U.S.

The workforce, however, is another thing altogether. Layoffs are certain as new technologies emerge and because consulting firms must keep up with industry technology trends and standards, legacy skill sets are likely to phase out.