The Narendra Modi government has just completed three years in office and one of the hallmarks of this period has been the focus on digitalisation and taking the country forward in a digital economy. Thus while Digital India as a major policy programme in practice is proceeding well, there has also been a growing degree of technology absorption at many levels in the society, where such a move has given a sense of pride and empowerment to the downtrodden as they hold their Aadhaar card and also make cashless transactions. The vision of inclusive digital ecosystem has also resulted in economic avenues and job creation and in many cases realignment. In a great sense such pervading avenue has also resulted in the creation of a larger domestic space and acceptance of technology-enabled networks and, in turn, has also resulted in more employment generation.
Information Technology (IT) industry in India has come a long way ever since the then Prime Minister Atal Behari Vajpayee set up the national task force for IT in 1998 that comprehensively looked at all aspects of the potential of the sector. Since then, much has happened and Indian IT sector has grown from being 1.2 per cent of the GDP to 7.5 per cent of the GDP currently. Indian IT companies derive a significant part of their revenue from global clients by serving two third of the fortune 500 companies and have created more than 40 lakh direct jobs in India and about 1.2 crore indirect jobs. It has significantly helped in the growth of many sectors including technical education and a plethora of service industry avenues. As per The National Association of Software and Services Companies (NASSCOM), the industry body, in the financial year 2017, 1.7 lakh jobs were added to the sector alongwith 6 lakh jobs added last 3 years. It is also expected that around 25-30 lakhs new jobs would be created by 2025 in the sector.
So while these figures and projections from the key industry body look encouraging, there are some reports about the shrinking sector and layoffs. Much of that has to do with a constant attempt to show the Modi government in a poor light and also to an extent the realignment that is happening as a new administration in the US under President Donald Trump tries to settle down and wants to project a more inward looking picture under his ‘Buy American, Hire American’ campaign. But the reality is that the global IT sector hasn’t shrunk and the demand even in North America still is on the rise. So the recent concerns around the H1B visas in the US that definitely reduces the number of Indians that go to that country has resulted in some layoffs and realignments at this stage but definitely, the impact on the overall industry is minimal. Much of the industry economics is driven by market dynamics and the wide footprint of the Indian tech industry across sectors will definitely not be an overnight vanishing act. Efficiency, not only in terms of cost but work optimisation, has led to success of Indian techies and the US industry realises that and still value that, taking steps to retain such talent. Today Indian IT industry accounts for about 67 per cent of the approx. USD 130 billion IT sourcing business in the world So while the doomsday sayers are trying to rattle with the misrepresented fears around, Nasscom team led by its senior leadership valiantly rang the Nasdaq closing bell in the US last Friday having been welcomed by the US industry giants.
Even the impact of any offshore loss would be valuably compensated by the growing onshore work across Indian cities across tiers and the increasing domestic demands. India’s overall domestic IT/BPM sector is expected to grow at 8.5 per cent from the USD 35 billion in 2016 to USD 37 billion in 2017. India’s internet economy is expected to touch USD 146.72 billion) by 2018 which will be about 5 per cent of the GDP. Likewise, India’s total software product market grew at 9.5 per cent in FY2017 to reach USD 7 billion out of which the domestic market grew much faster, at 10.4 per cent, reaching USD 4.8 billion compared to the exports that grew at 7.8 per cent to reach USD 2.3 billion. With the push for Digital India, electronic manufacturing, setting up BPOs in small towns and the North-East and the continued excitement among techies for the start-up sector, the employment and entrepreneurship avenues are on the rise. More than 1 lakh direct jobs and 3 lakh indirect jobs have been created in the last couple of years for the mobile manufacturing industry which is expanding rapidly across a few states. More than 48000 BPO seats are to be filled in 2017-18 in the small towns and about 15000 in the North-eastern states. Also as per NASSCOM, in 2016, Indian technology startups employed 95,000 to 100,000 IT professionals, across more than 4,750 startups. Besides growing focus on e-commerce and cyber security will add a few lakhs jobs more as demands are soaring. A TeamLease report indicates that e-commerce and technology startup sector hiring sentiments has increased by 2 per cent, with projected 14.94 per cent job growth for 2017-18.The drive for cashless economy post demonetisation drive last November has also titillated many industries to move to more digital forms of payments and in terms also create opportunities for customised applications and employment. Even the Internet of Things regime that is on the horizon will be a net job creator across sectors.
While such a domestic surge is a welcome sign and also seem to be a steady feature for the coming years, the focus to expanding to newer geographies and to newer avenues like artificial intelligence and blockchain technologies are being vigorously pursued by Indian IT community. Needless to say the trust on the Indian IT community across the globe is phenomenal and this coupled with business acumen and financial advantages make it an optimal opportunity that emerging competition in many pockets across the globe has not been able to wean away business. Only losses that have happened since the past have been due to emotions and local sentiments in a few geographies but these pale into insignificance considering the gains made in many other sectors and clients. However, there is also an opportunity to look at newer areas even domestically and also rise up the value chain. With a focus on electronics manufacturing that is already pegged at USD 22 billion in 2017-18, there is a greater scope for expansion. As a matter of priority, the next for the government would be to set up semiconductor fabrication units in the country to manufacture chips that would also bolster the cybersecurity industry and capacity building in the country. Further, the strategic focus on self-realisation and indigenisation in the defence industry where today’s weapons and types of equipment rely significantly on the command, control, communications, computers and intelligence (C4I) ecosystem will require a significant base of trained human resources to be employed on a regular basis.
Indian IT industry has survived many tests in the last three decades of global rise and acceptance as a destination of reliable IT products and
solutions. It lived to the challenge of the Y2K when the fears around the IT systems transition to the new
millennium was smoothly handled by the Indian techie community. During the 2008 economy meltdown in the US and other global economic powers, Indian software exports and the
industry clocked steadily double-digit yearly growth for all those years of
turmoil and continues this trend till today. Nasscom has clearly forecasted the Indian IT industry to achieve USD 350 billion in revenue by 2025, from the present USD 153 billion and all of that will be driven by strong and stable
fundamentals. Needless to panic, it is time for the watch and better
(The writer is a cyber security specialist and writes on issues of technology and security)
Change, not a Crisis
IT-Financial experts suggest that the layoff of employees does not indicate a crisis rather it is a makeover happening in Indian software industry. IT companies are being forced to change their business model. This is not crisis
Responding to it, in May last week, NASSCOM made it clear that IT sector continues to be a “net hirer” and added 1.7 lakh jobs in 2016-17. The industry association said the fourth quarter of the last financial year saw top five IT majors hiring 50,000 employees. It said that the retrenchment is performance linked and is impacting only 0.5-3 per cent of the total workforce of the IT sector, implying that this year is not different.
“Reports of mass layoff in IT sector are rejected,” said R Chandrashekhar, president of NASSCOM. Nasscom forecasts industry revenue to touch $154 billion in FY 2017 compared to $143 billion in FY 2016, marking a single-digit 8% growth in the IT and IT-enabled services sector, which contributes half of the country’s service exports and around 7.7 per cent of GDP. (Reference: NASSCOM)
Why the panic?
* The layoffs have very little or nothing to do with Demonetisation or Indian Government policies.
US government came out with a notification that jobs have to be given on priority to US citizens as much as possible and limit outsourcing. At the end of the day US government has to ensure jobs for their citizens, profitability of companies are distant in comparison.
H1B is a work visa which is used by companies to hire workforce out of their country. The Visa criteria is simple, if the skillset is not available locally, companies can go in for H1B route to get the resource.
An employee who is hired by H1B route earlier had a minimum salary of 60000$ per annum. But recently a bill is proposed which will take the salary of such an employee to 1,30,000$ per annum. As a result, companies are now applying for lesser number of H1B”s as compared to before and focusing more on local talent which can be made available much cheaper.
Earlier companies would focus on keeping 1:2 person ratio for onsite: offsite work. Meaning for every one person onsite they would have up to 1 or 2 add on resource offsite for faster and more efficient working. Decreasing number in onsite work resource will also create a ripple effect in the number of people companies have to keep offsite.
* Because of smarter automation and advancement in technology, is now demanding lesser human interference.
* There is a major hiring spree in Business Development and Business Acquisition areas. This will result in more jobs within country, so what IT industry is going through is nothing but a self reassessing and correcting mode.
* Till date IT companies in India are majorly doing consultation or implementation work for clients in US. US business is hands-down the biggest piece of pie in revenue of IT companies. It is very important that a change is mindset comes and we go from a support and
consulting intensive to an active product development. Come to think about it, how many indigenous large scale products do we use on a day to day basis. The answer is bound to put you in deep thought.
Coming to the IT sector, a lot of things are being told about the downturn. It is completely wrong. I want to deny it. The export of Indian IT companies outside is close to Rs 7.4 lakh crore and the STPI (Software Technology Parks of India) helping entrepreneurs to export (services) worth about Rs 3.5 lakh crore
—Ravi Shankar Prasad, Union Minister of Communications and Information Technology
Each year our employees are evaluated based on strict performance criteria in an objective process, consistent with industry norms, to ensure we are aligned with our customer needs, business priorities, and the overall industry evolution. This leads naturally to a varying number of employees transitioning out of the organisation in any given year. We continue to accelerate our training programmes in 2017 with over 2,000 India employees having already undertaken upskilling and emerging technologies training alone
— Capgemini, Information technology consulting company
Cognizant has not conducted any layoffs. Each year, as is the best practice across our industry, we conduct performance review to ensure we have the right employee skill sets necessary to meet client needs and achieve our business goals. This process results in changes, including some employees transitioning out of the company. Any actions as the result of this process are performance-based and generally consistent with those we”ve made in previous years
— Cognizant, Software development company