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Will IT Companies See Big Layoffs In 2020 Due To Automation?

The recent shocking news of layoffs by top IT companies raises the question of job redundancy, and what people should do if laid off.

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For the IT sector, the end of 2019 saw a noticeable dampened mood as top IT companies let go of employees. Cognizant, Infosys, Capgemini, UiPath were some of the companies that laid-off employees stating various reasons. 

Cognizant reasoned restructuring as an explanation for the lay off of 7000 employees. Indian multinational corporation Infosys also laid off 2,200 employees from senior staff and around 4000-10,000 mid-level executives for involuntary attrition. Capgemini, too, joined the layoff spree by letting go of 500 employees saying the business was slowing down. 

The IT sector was riding high on employment opportunities, higher incomes and global clients, contributing significantly to the Indian economy just 5 years back. However, the layoff numbers and cost-cutting is indicating a major economic slowdown, maybe even a global recession. 

If there is a recession, the Indian IT market would suffer seriously and taking into account the unemployment rate increased to 7.60% in December 2019, the causes should be identified. 

The reasons behind these layoffs

Most big companies lay off for varied reasons- slow business growth, reducing team, mergers and acquisitions, restructuring, etc. However, the decision to cut costs by employee layoffs is a company’s choice. 

The IT sector has witnessed huge layoffs in the past year and the companies haven’t shown a major loss to take such a bold step. For example, Cognizant fired around 7000 employees with 70% of its workforce being in India. They did record a net profit for that quarter and didn’t really have to lay off. Why did they then? They plan to invest that money in technologies such as Cloud and Internet of Things (IoT). 

Read: Cognizant’s Co-Founder And Vice Chairman To Steps Down, Vinita Bali Will Take Over

On similar lines, layoffs in Infosys were also done to optimize costs and meet the need of technology upskilling. This brings us to the ‘irony’ that people employed in the technology sector are being laid off due to technology upgrading. 

Technology irking layoff decisions?

Automated Processes

Online delivery application Zomato laid off 600 employees because they shifted to automation for some of their processes. With technologies such as Artificial Intelligence, Machine Learning and Deep Learning, there is a higher possibility of jobs becoming redundant. 

The advantage of these technologies is that they promise faster and efficient work which is why organizations want to move there. 

New technology skills

Along with this, technology is constantly upgrading and with it, employees are also expected to learn using this technology. In the past 5 years, AWS (Amazon Web Services) has become very relevant to processes and employees who have learned the process would be relevant to the organization.  As for programming languages, Python is in high demand which is why even Java developers are learning it. 

What should people who have been laid off do? 

Being under constant anxiety surrounding job security in the IT sector can be overwhelming for an employee. With changing trends and uncertain economies, it is best for an employee to work on a merit basis. When OYO went on a layoff spree, they laid them off based on merit tracking and determining their performance as a factor to lay off. 

Read: Oyo To Layoff More Than 2000 Employees: Is India On A Layoff Spree?

As is clearly indicated in the explanation above, a need for upskilling is crucial for employees in the IT sector to hold their jobs. As per a PWC research, 79% of CEOs were worried about the lack of essential skills in their workforce. Not just CEOs, every organization is looking for employees that reskill and upskill themselves so they are able to make the most out of emerging technologies. As an IT employee, one should be constantly upskilling themselves with new technology expertise such as learning a new programming language, researching on data science, working on artificial intelligence, etc. 

Is the same trend likely in 2020? 

With the manner in which things have ended in 2019, this year too might see more layoffs as companies move to adopt technologies such as AI, ML, and IoT making some jobs redundant. While employees should be aware of redundancies in roles, the overgrowing population of India will see a major unemployment phase. For now, specializing in fields and working for merit should be the goal of IT employees.


If you have an interesting article / experience / case study to share, please get in touch with us at [email protected]

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