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Indian IT Industry: What’s the Turmoil About?

We have been hearing the following kind of statements from the industry experts from last few months:

Indian IT industries dream run in over.

IT Industry: Bleak future ahead for sacked IT employees.

IT sector to see up to 38% fewer jobs this fiscal.

These were not just statements but were based on a series of incidents, that unfolded in last few months & created a ripple effect across the industry.

All of this started during the first week of April 2017, when Trump administration decided to make H-1B visa vetting process more rigorous for Computer Programmers. During his campaign, Trump had promised to follow a ‘Hire American’ policy to protect American jobs and wages which were ‘taken up by immigrants’. Although the world was focusing on this major announcement from USA, in the meanwhile, Singapore decided to block the VISA for Indian IT companies. Similarly, Australia also decided to make its visa requirements for skilled resources stricter, by amending 457 visa.

Why amendments in VISA?

All these amendments were made by the governments to secure the interest of the citizens of those countries. Like 457 of Australia, which was a 4-year business visa, allowing the visa holder to live in Australia along with the family. The amendment will reduce the visa tenure to 2 years & the job categories will be reduced to 200 from 650.

US To Resume Fast Processing of Some H-1B Visa Categories Soon

Impact on Indian IT Industry

Over the past few years, many experts have been saying that the IT companies like TCS, Infosys & Wipro are working like agencies which export software engineers overseas, causing the brain drain. But with these latest visa restrictions coming into highlight across the globe, the effect started showing in the Indian IT industry as well. Soon the news started coming like, Infosys is planning to hire 10,000 people locally in USA over next 2 years. Along with that, the news of companies laying off people also started making highlights.

News of laying off from companies like Infosys, Wipro & Cognizant made highlights time and again in last few months, but most of the companies clarified that these are related only to the performance & nothing to do with the fact that they have a motive of balancing the Costs they have recently incurred, due to increase in the overseas expenses. Another reason, companies have been stating as the reason for layoffs is, Automation. This must play a major role in the IT industry going forwards & will be a huge factor for any company to emerge as a clear market leader. Hence, most of the companies are now focusing on the Automation & trying to reduce the workforce to maintain their profit margins.

There were even rumors that India’s 3rd biggest IT company,Wipro’s promoters are planning to sell their holding in the company. On 5th of June, the Chairman of Wipro, Mr. Azim Premji, wrote a mail to all Wipro employees rejecting all these rumors as baseless.Adding to these rumors, earlier this week it was reported that 400 senior executives in Cognizant, accepted the Voluntary separation scheme, which was initiated during May 2017.

Recently in an interview, Infosys co-founder Mr. Narayana Murthy suggested that, to save the jobs of the young workforce, senior executives should take pay cuts. He also said that this is not the first time that IT industry is going through a rough patch & every industry goes through this. There is no point blaming the IT industry. Hence, if the IT industry is shrinking, then people should start working on re-skilling themselves & look for an alternate solution, as in the current scenario, it will be difficult for the IT companies to create the same level of opportunities as it used to create over the last decade.

The impact of the global events is very much eminent on the Indian IT industry though & for the first time IT giants like Infosys & TCS ended up Q1 with single digit growth figures. Experts believe that the double-digit growth will soon become as history, in current market conditions.

Dynamically changing IT Industry

With the IT industry shrinking dramatically & as predicted by experts that new opportunities will reduce, there has been a major impact on the job market as well. The usual flooded job market has dried up substantially & techies are finding it real tough to switch jobs from past couple of quarters. There has been a recent unfortunate event in Pune, where a Techie committed suicide. In his suicide note he mentioned that he is worried about his family & there is no job security in the IT sector anymore. Recently, in July a mass protest was organized in Bangalore, against the “Illegal” mass lay-offs. IT employees have first time decided to move to the Labor ministry, to ensure no one is fired from the company without proper justification.

Global Impact on IT Industry

The complete Business Model of Outsourcing was based on the fact that, it will reduce the operational costs. India has started getting a tough competition with new development centers coming up in countries like Philippines, Indonesia & Brazil. India still hold an edge with the largest English speaking workforce, but if the cost of delivery is not reduced further, it be face a downfall. Hence, many IT companies have started moving their operations from cities like Delhi, Bangalore & Pune to new low-cost locations like Hyderabad, Kochi & Coimbatore. It id be a false statement if someone says that Indian IT industry didn’t saw it coming, as these companies already started working on the plan to sustain this phase few years ago.

The Indian IT industry is strong enough to sustain these kinds of tremors time & again. Hence, we can only hope that the tide will pass on, as just another lean period, like the recessions during 2002 & 2007-08.

Payel Bhowmick
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Payel Bhowmick

The author is an analyst at SpringPeople & writes on emerging technology trends for IT professionals. Passionate about technology, her current area of focus is the digital revolution currently underway in the edu-tech industry. When not at work, Payel splits her time between writing, reading and watching sci-fi movies.
Payel Bhowmick
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One comment

  1. Why Indian government is not banning google, facebook and other US companies in India (I know we have signed WTO but we can do that), Indian IT companies can develop search engines, social media and messenger apps. These will generate jobs for Indians and US will understand that we have right to protect our IT people.

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