The IT and BPO Sector is one of the largest employers in India. More than 40 Lakh citizens are employed in the IT industry in India and abroad. Today, the IT Sector in India is speaking a different language. The language of layoffs. If you are working in the IT industry, better watch out for these two words. YOU'RE FIRED. Bengaluru techies are in panic mode. Indian IT firms plan to layoff up to 2 Lakh engineers annually for the next 3 years.
Infosys may ask 1,000 senior and mid-level employees to leave. More than 6 Lakh IT jobs are on the line. Cognizant has asked 1,000 senior employees to take a severance package of around 6-9 months. A report by McKinsey and Co. says nearly half the workforce in IT services firms will be 'irrelevant' over the next 3-4 years.
The Indian IT Sector is in a panic. Bengaluru techies are running for cover. But, is only the IT Sector feeling the heat? What about banks, tourism, hospitality and the automobile industry? Are IT layoffs affecting these industries? Time to find out. Want to know more on investment planning? We at IndianMoney.com will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice / education to ensure that you are not mis-guided while buying any kind of financial products.
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The IT Industry in India is undergoing a massive transformation. Automation is replacing mundane jobs in the IT Sector. Yes...Automation is stealing your cozy IT job. The BPO Sector in India is facing a major upheaval, as automation replaces mundane jobs.
With Automation, middle and senior level positions in IT Companies are now redundant. IT Companies are using the carrot and stick approach to force senior employees towards the exit. The carrot....A severance pay of 6 to 9 months. The stick...You get threatened and you are denied access to your office, if you do not accept severance pay.
Middle and Senior level employees are being replaced by lower cost employees. If you are a senior level employee in an IT Firm, your job might just be snatched by that fresher who is skilled in Big data and Internet of Things. Your IT Company finds it cheaper to hire fresh candidates than to train older ones.
Donald Trump has tightened the H-1B visa regime in the United States. The H1B visa is an employment-based, non-immigrant visa category for temporary workers. H-1B visas will be given only to very skilled and highly paid applicants.
More than 86% of H-1B visas were issued to Indian IT Workers. Expect this figure to come down to 60% or less. Indian IT Companies cannot place you and other Indian employees in the US. This is eating up their revenues.
Indian IT Companies have no choice but to hire in the US. For every 1 person they hire in the US, they have to sack 4 Indian IT employees.
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If you are a middle or senior level employee working in an IT Firm, you would have 8-12 years of experience. You would earn a salary of around INR 12-18 Lakhs per annum. What would you do with such a high salary package? You would avail a home loan or a car loan from the bank to buy your dream home or car. When lakhs of middle and senior level IT employees avail loans to buy cars, houses and apartments, banks and real estate enjoy a consumption boom.
Apartments worth lakhs and even crores are purchased fueling a boom in the real estate industry. Banks finance the purchase of your apartment/house, sanctioning home loans to you and other middle/senior level IT employees, worth lakhs or even a crore.
Picture this....If IT Firms layoff middle and senior level employees, who will repay home and car loans? Wouldn't banks face a major crisis as defaulters on home and car loans increase?
2. Layoffs could increase defaults on education loans
India has an exposure of more than 1 Lakh crores in education loans. Take a look at this...The entry level salaries in most IT Firms have been stuck at INR 3-3.5 Lakhs a year, for nearly 7 years.
Job losses and a slowdown in hiring by IT Firms, could affect the ability of young IT employees to repay their education loans. Banks and NBFC's could be staring at defaults on education loans. Worse...a default on education loans could become a political issue.
3. Layoffs could blow away the hospitality and tourism sector
If you are a middle/senior level employee working in the IT Sector, you could earn more than INR 15 Lakhs a year. What will you spend this money on? Parties and holidays....Perhaps even trips abroad.
With IT Firms laying off middle and senior level employees, would you still blow your money on parties, holidays and foreign tours? Would not the hospitality and tourism sector take a hit?
The IT Sector in India is definitely going through tough times. If you are an IT employee working in India, you have to reskill yourself. Perform or Perish. If you are a middle/senior level employee working for an IT Firm, watch out for those ambitious fresher's. They might just steal your job.
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Mr. C S Sudheer is the founder and CEO of IndianMoney.com – India’s largest Financial Education Company. He started his career with ICICI Prudential Life Insurance and later on worked with Howden India. After his brief stint in Howden India, he moved on and incorporated Suvision Holdings Pvt Ltd which is the sole promoter of IndianMoney.com. He aims to build a nation that is financially literate with investment savvy citizens.
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