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Rediff.com  » Business » IT services may see over 1 lakh layoffs by Sept

IT services may see over 1 lakh layoffs by Sept

Last updated on: April 27, 2009 15:53 IST
The Indian IT services sector may see up to five per cent layoffs - amounting to more than one lakh job cuts - over the next six months as companies focus more on cost-cutting due to persisting weakness in global demand, experts say.

Companies may reduce workforce in this fiscal, mostly based on stringent performance criteria, experts added.

"We expect the knowledge industry (IT) to see 3-5 per cent non-voluntary exits in the first two quarters of the financial year mainly in senior and middle levels," P Thiruvengadam, senior director (Management Consultancy Services), Deloitte Touche Tohmatsu told PTI.

Given the fact that more than 22 lakh people work in the IT industry, five per cent non-voluntary exits would mean more than one lakh employees being shown the door by September.

Nasscom estimates more than 22 lakh people were working in the Indian IT-BPO sector in FY2009 (till February), while indirect job creation is estimated at about eight million.

C S Venkata Ratnam, director, International Management Institute (IMI) said, "The IT sector is better off but it may see up to 4-5 per cent job losses in the first two quarters of this fiscal." 

The global financial turmoil has also hit the country's other export-related sectors including textiles and some unorganised industries like auto ancillaries, Venkata Ratnam said.

Besides, IT services (including engineering services, R&D, software products) exports, BPO exports and the domestic IT industry provide direct employment to 9,47,000, 7,90,000 and 5,00,000 people, respectively, Nasscom says.

The next 5-6 months would be critical for companies in deciding on job cuts. At present, layoffs are very few and more companies have frozen hiring to tackle the economic slowdown, Thiruvengadam said.

Last week, third-largest software exporter Wipro said it would freeze salary hikes and is uncertain about campus recruitment.

Further, as per government data, over one lakh people lost jobs in the export sector due to the global downturn.

Asked about what strategy they are advising, experts said adopting a wait-and-watch policy and a mature outlook would be the best policy.

"If professionals aim towards multi-skilling and put in extra efforts to dabble in other areas of work as well, they stand a chance of becoming indispensable to their companies," Thiruvengadam said.

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