In the last few months, has there been a single morning where we didn’t wake up to at least one headline about mass layoffs or an impending global recession? With some of the biggest tech giants such as Meta, Amazon, Intel announcing mass layoffs, there was an eminent fear and uncertainty among the IT crowd. And Twitter’s hard slashing of half of its headcount in search of a sustainable profit model has just added more fuel to that disquiet. The Indian IT sector is also thrown into a wave of panic owing to the U.S. mass layoffs. But does India catch cold when America sneezes? Should you do something about this? Well, let’s dive a little deeper and find it out ourselves.
The Story in a Nutshell
In September last year, Alphabet CEO Sundar Pichai spoke about a looming winter in the tech sector. Responding to the staff queries on budget cuts in all-hands meeting, he said, “We don’t get to choose the macroeconomic conditions always.” But what makes a CEO of a top tech giant say that. Well, due to the mounting inflation rates around the globe, the central banks have been scrambling to control the inflation by increasing rates so as to make it more costly to borrow and consume, reported Hindu. The Hindu’s report also talked about the forecasting of International Monetary Fund (IMF) which cited a gloomy growth in the global GDP for 2022 and 2023. The aftermath of the pandemic and the on-going Russia- Ukraine war are just a few reasons to this.
Prioritizing cost cutting and loss mitigation, companies have started going hard on reducing the headcounts. According to Reuters, American technology firms dominated the number of announced job cuts in December, as some employers downsized workforces to brace for the prospect of difficult economic times looming ahead.
How is the Indian Scene?
The U.S. mass layoffs are certainly going to have a ripple effect on Indian firms, especially on the IT sector. IT sector in India is the biggest employer in the organized sector. Every job added or removed will have a trickle-down effect on jobs in other sectors. Hindu, in their December report found that except for the layoffs due to moonlighting, there are no significant instances of mass layoffs in the Indian IT services sector. This report further explained that, the July-September quarter of 2022 has seen a rise in the revenue of net profits of all the Indian IT services companies save Wipro, who reported a 9% drop in their revenues when compared to 2021. On the other hand, the attrition rate (number of employees leaving the company per hundred) is also between 20-27% for companies such as Infosys and TCS. This shows that there are enough profits for the companies to attract employees of their competitors. However, is this going to continue? The automation of mundane repetitive human tasks is going to disrupt areas such as manufacturing industries. On the other hand, digital transformation is becoming the top priority of several industries. Yes, this does not mean humans are going to be replaced by automated software and robots. We are certainly not talking about Sci-Fi fantasy.
All the same, the upcoming disruptions in the Indian industries including IT firms demand upskilling of their employees. People who choose to do same work, stay in the same job, and try to survive with the same static skillset might be considered as outdated. The disruptions due to digital transformation initiatives may result in layoffs as the companies try to hire people with agile and relevant skillsets. Smaller companies who generally do not have great budgets will further look to cutting on budgets and hence would go for consultants and freelancers who bring great amount of skill and agility onto the table.
The Coming Winter
When companies want to cut down on their headcount, they first look for most productive and efficient workforce. In the wake of budget cuts, no organization would want to have too many people on the benches. People who were lucky enough to escape the mass layoffs of 2022 are now living in a state of layoffs anxiety wrote Forbs. “Each morning, the Remainders who escaped termination will worry if today is their last day at the company. Every task a person takes on is a potential landmine. If they make a mistake, lose a major customer, say something wrong in a meeting, miss a video call or fight to remain working remotely, there is an inherent risk of being targeted for the next round of layoffs.”, wrote Forbes in their recent article.
What Should You Do?
Well, as complex as it may seem, the answer for ‘What should you do?’ is very straight forward. Up your skills. There should not be any end to your skillset growth. The future of work depends on multifaceted and multidimensional workforce. Companies look for high productivity with low cost. Creative thinking, problem identifying and problem solving, and agile workstyle will be the top skills companies will look for. And People with up-to-date and diverse skillsets will be their top hiring priorities.
Freelancing – The Way Forward
The future is rapidly moving towards the project economy. Companies are now more interested to hire freelance experts to work on a tangible outcome than hiring a full-time employee. This saves a lot of money and gets the job done in half of its original time. If you seriously consider growing your skillset and developing your expertise in an industry, freelance is the way to go. Once you have a strong network, no matter how bad the economy is, you will find clients coming to you. In fact, as the hiring stops, the work continues. And freelancers will be the saviors at the times of uncertainty. In its recent article on freelancing trends, forbs said, “Freelancer first. More marketplaces are prioritizing the success of freelancers through investments in freelancer intelligence, client intelligence, and operational intelligence.”
There are a ton of benefits of being a full-time freelancer. However, being your own boss is certainly on the top of that list. Long story short, not recession, not gloomy economic growth, not low profits, nothing can fire you from your job if you are a freelancer!
How Can We Help?
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