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Is IT losing its sheen as favourite employer?
Lipi Agrawal | HRKatha | New Delhi | Tuesday, 09 May 2017

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With dipping revenues, falling hiring numbers and the kind of talent sought by IT industry undergoing a massive change, what will keep the charm intact? 

For lakhs of engineering and management graduates in the country, the big five Indian IT companies have been the most sought-after destinations for many years now. Great campuses, attractive packages and even more appealing perks loaded with international travel and postings lured the best of Indian graduates to these IT companies. The industry also, on its part, has been an employer of great repertoire.

But all’s not well. The change is happening fast and getting accelerated by the day. Of late, the great Indian IT industry has been on a wrong turf. Be it internal feuds, declining numbers or changing labour laws in destination countries of business, the industry is certainly affected.

The butterfly effect has begun. Post-Trump, the global markets have contextually been protective of their economies. Outsourcing, which was the economic victory mantra for the IT companies in the last decade, has suddenly now made them realise their job losses and consequential unemployment in the economy. The agenda has now become political.

Infosys grew at 13.3 per cent in 2015-16, which came down to 8.3 per cent last fiscal and is expected to grow by 6.5-8.5 per cent this fiscal. Cognizant which was growing at about 20 per cent expects a revenue growth of only 8-10 per cent. Same is the case for TCS which has been growing at more than 13 per cent will now have a revenue growth of 8.3 per cent. And for Wipro, the revenue growth forecast is only 1.25 per cent for the next quarter. In fact as per media reports based on internal communication, the company plans to downsize its employee strength by 10 per cent, if its revenue doesn't grow.

“People resources tend to behave and mimic behaviours of other market commodities in the 'demand–supply' warp. Principles of arbitrage continue to apply and put pressure on the cost. When demand falls, the Adam Smithian invisible hand naturally brings the price of labour down, and the same has happened for these IT-people-outsourcing companies.”

Adil Malia

Infosys grew at 13.3 per cent in 2015-16, which came down to 8.3 per cent last fiscal and is expected to grow by 6.5-8.5 per cent this fiscal. Cognizant which was growing at about 20 per cent expects a revenue growth of only 8-10 per cent. Same is the case for TCS which has been growing at more than 13 per cent will now have a revenue growth of 8.3 per cent. And for Wipro, the revenue growth forecast is only 1.25 per cent for the next quarter. In fact as per media reports based on internal communication, the company plans to downsize its employee strength by 10 per cent, if its revenue doesn't grow.

Opines Adil Malia, the former head-HR, of the Essar Group and now CEO, The Firm, “People resources tend to behave and mimic behaviours of other market commodities in the 'demand–supply' warp. Principles of arbitrage continue to apply and put pressure on the cost. When demand falls, the Adam Smithian invisible hand naturally brings the price of labour down, and the same has happened for these IT-people-outsourcing companies.”

“Attractiveness of this sector—in terms of its ability, either to pay 'mark-to-market' compensation or absorb more talent— is a consequence of falling ability to absorb talent. Thus, the sector loses its talent attractiveness,” Malia adds.

“Career transitions will happen, where I see a lot of people moving from the IT industry to other industries, and to manage this shift IT needs scaling up and has to grow their businesses.”

Rajesh Padmanabhan

Another senior industry professional, Rajesh Padmanabhan, director, Group CHRO, Welspun Group quips, “Career transitions will happen, where I see a lot of people moving from the IT industry to other industries, and to manage this shift IT needs scaling up and has to grow their businesses.”

Concurs Rituparna Chakraborty, co-founder- EVP, TeamLease — “Many of the older jobs, especially those which changed the fortunes of millions of youth, who were fresh out of their engineering colleges, will become redundant.”

According to Pankaj Bansal, co-founder and CEO, PeopleStrong, it’s the IT services companies that are losing the sheen and not the IT products companies. “As IT companies will have to reinvent themselves and transform into more platform-based organisations, they will remain the cynosure of the job market although, the hiring numbers may reduce,” Bansal explains.

(L_R: Adil Malia, Rajesh Padmanabhan, Pankaj Bansal, Rituparna Chakraborty)

Change is inevitable. The industry will need to reform at a quick pace, and NASSCOM will have to guide this process and lead from the front. The industry will have to come out of the outsourcing/service-providing mindset, to lead change and technology. The classic IT services companies of India will have to quickly get into the products domain, and this will bring in the change in hiring outlook as well.

“IT may not be the aspiration for the ordinary youth, but will remain the Mecca for the highly skilled, motivated lot.”

Rituparna Chakraborty

The IT industry, which was known for bulk hiring will now move to niche hiring. Specialised skills will govern premium, which means the industry will seek niche talent rather than hiring in bulk. Core skills, such as data scientists, analysts, technology architects, embedded techies, AI specialists and advanced predictive systems will govern the demand and supply premium in the industry.

Padmanabhan says, “India still has the best global talent in the new emerging technologies, and a complete repositioning strategy to reinforce both the IT industry and the customer world will provide an opportunity for talent dispersal, rather than a mindset of service providing.”
“As IT companies will have to reinvent themselves and transform into more platform-based organisations, they will remain the cynosure of the job market although, the hiring numbers may reduce.”

Pankaj Bansal

“Hiring managers need to know how to fulfil talent requirements for today and scale them for tomorrow. This vision over a two to three years’ window is crucial in the current context,” he adds.

IT companies will have to spend time upskilling and preparing for the new-age roles and responsibilities. The ones who understand and practise lifelong learning shall get ahead, while the others will be left behind.

Hopefully, IT in its new form, will continue to be the talent magnet, but not for those simply trying to get employed. After all, India is a global, digital/IT talent country and not an outsourced, cost arbitraged resource centre.

As Chakraborty aptly concludes, “IT may not be the aspiration for the ordinary youth, but will remain the Mecca for the highly skilled, motivated lot.”

© 2016 HR Katha
Last modified on Tuesday, 09 May 2017

2 comments

  • Comment Link Prithvi Shergill Tuesday, 09 May 2017 posted by Prithvi Shergill

    The challenge as change overtakes the industry will be the need to change the mindset of the workforce as nature of work and workplace changes. The criticality of unlearning, learning and relearning iteratively at a pace where capability development acccelerates to enable people to remain relevant as talent supply to meet volatile demand will be key. The ability of the individual and collective in organisations to do so at scale and speed will be the indicator as to which organization and which people will be future ready

  • Comment Link MVS Murthy Tuesday, 09 May 2017 posted by MVS Murthy

    On the ground being an IT service provider - though captive - I do not see a concern in our operations, may be scale, maturity etc could be the reasons. However this time around it is becoming a lot more speculative given that drivers of the industry are in the line of fire themselves. Maybe some amount of consolidation will take place over a period of time, and as Ritu said, IT will be the mecca of job market. Do we have an alternate option favourite industry, I wonder no...

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