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Indian IT sector facing major strains

By Nitya Chakraborty. Dated: 5/20/2017 10:35:56 AM

Government doing nothing to deal with large lay offs

As the Narendra Modi Government is busy making preparations for its gala third anniversary at the centre later this month, reports are coming every day of big lay offs in the information technology companies in the country. The impact of the Trump administration's decision on the Indian IT sector has not been fully analysed yet but even before the total assessment is done by the Indian companies, the managements which have earned huge profits in the recent years through software exports and other IT related activities, have started firing its own employees at the first available opportunity.
The Prime Minister is going all out for building a digital India but the main protagonists who will help in building that, are losing jobs in every part of the country. The situation has taken a serious turn but at the central government level, there is no seriousness in dealing with the situation. Prime Minister is setting up large number of committees but no group has been set up to tackle the crisis in the Indian IT industry which employs lakhs of young people. IT industry experts are saying that the present situation of job loss is unprecedented in the country in the recent years and even in 2008 economic crisis, the job situation in IT industry was much better and so much lay offs did not take place.
Experts estimate that there are 40 lakh persons employed in the IT industry in India and overseas and out of them at least 25 per cent will be adversely affected. Some of the highly trained people may get jobs again in some other companies but the introduction of robots and automation in an increasing manner in the Indian companies, will make it difficult for many medium level trained people to get jobs. In fact, already the IT managements are saying that a large part of the present employees have not the adequate skills to retain their jobs and there is every possibility of further job cuts in the industry on the pretext of skill upgradation.
Consultancy industry sources point out that the Indian companies made roaring business when the going was good and they made use of semi skilled IT workers at low wages and now the business models have changed in a large number of US firms and more emphasis is on digital business leading to use of less people for the designated work. The leading Indian IT companies are faced with this problem and they have no alternative but to reduce the number of staff to protect their bottom line.
The Government sources are unmoved at the present state of affairs in the IT industry. The officials rather point out that the job losses are a standard practice and the numbers are not very different from what they were over the past few years. This is just ignoring the ground reality. Industry experts do not share the government view that net marginal decline is offset by the number of startups or new jobs created in other areas. A CII report says that overall, in India nearly 3.7 million jobs are created annually while about 10 to 12 million join the working population. However, of these about half do not opt for jobs, they go to education and other activities.
Overall, the job situation looks extremely grim as despite all the tall talk about the development by the Modi government, the employment scenario is bleak. A report by the International Labour Organisation has projected that the number of unemployed people will rise in India in 2017 as also in 2018.The ILO has projected that the number of jobless in India will increase from 17.7 million 2016 to 18 million in 2018.
Globally, the ILO reckons that the number of jobless people will increase by 3.4 million in 2017, in its report on World Employment and Social Outlook for 2017 released recently, with projections based on econometric modeling carried out in November 2016. The global unemployment rate is expected to rise modestly from 5.7 to 5.8 per cent in 2017 as the pace of labour force growth outstrips job creation.
Economic growth continues to disappoint and underperform - both in terms of levels and the degree of inclusion. This paints a worrisome picture for the global economy including India and its ability to generate enough jobs, let alone quality jobs.
Vulnerable forms of employment, which include contributing family workers and own account workers, are expected to stay above 42 per cent of total employment. About 1.4 billion people are likely to be engaged in such employment in 2017, with the number rising by 11 million per year, with Southern Asia and sub-Saharan Africa being the most affected.
"In fact, almost one in two workers in emerging countries are in vulnerable forms of employment, rising to more than four in five workers in developing countries," said Steven Tobin, ILO senior economist and lead author of the report. The report has clubbed India in the category of emerging nations.
—(IPA Service)