Done blaming Modi for IT Layoffs chaos? Now read the real reason behind India’s IT sector’s collapse

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Narendra Modi IT

In January 2015, my employer, a well-connected educationalist, holding the position of the Chancellor in one of the biggest universities in North India, called for a meeting that brought together senior HRs from the leading companies operating in India. The party, cloaked in shallow professionalism, lasted for a couple of days. Everything, from flight tickets to the countless bottles of alcohol were on the house for the invited HR professionals. Luxury cars escorted them from the biggest hotel in the city to the university premises, where, during the day, praises of the chancellor were sung. Dance parties and lavish buffets complemented their brief stay, and their farewell gifts constituted pointless mementos, expensive watches, and the latest gadgets. All this pacification yielded a record number of campus placements later that year from the university, leaving the Chancellor beaming, and furthering his cause of becoming the leading educationalist in Northern India.

Bribing HRs for campus placements is a regular practice in the private universities of North India. To compete with the renowned colleges affiliated to the State Universities, Chancellors, CEOs, and Directors shell out money each year to have HRs on their campus for placements. For some, this is the only way to have their students recruited. Some educationalists go a step ahead and organize fake placements with some leading tech giants of India. Students are called in, tests and interviews are conducted, offer letters are awarded, but quite often, the call for appointment never comes, leaving the student high and dry. Working closely with another university in the same region, I realized educationalists merely care for the number of students who are offered jobs, and not who make it to the company. For instance, if a university has 100 students in Computer Science, and each of them is awarded an offer letter by the likes of Infosys. However, 6-9 months later, even if only 25 of the 100 are given their joining letters, the university, without any legal or moral obligation will claim that it had a 100% placement rate, fooling more parents and students in the process.

Hiring, for the last decade was both unprecedented and unregulated. Bench strength in companies, that are now laying off rapidly, was increased. This was done in order to manipulate certain taxes, prepare for potential projects, or earn projects that required the company to have a given employee strength. Professionals, while waiting for a project to work on, had the opportunity to undergo training, avail online courses, and enhance their professional network. Also, there were some, who while being on the bench spent a couple of years completing their Master’s without going to their workplace even once a week!

The bench strength was strengthened by the hiring practices listed above. However, not all companies can be termed as unprofessional nor can all the placement drives be termed as fake. Certainly, some private universities did raise the bar of education and recruitments, but they continue to remain a rarity. Many smaller universities continue to depend on Joint Campus Placements. Amalgamating them with the real campus drives, universities made a business out of recruitments. It all was going well, but the chickens had to come home to roost someday, and they did. In the attack by invasion, Donald Trump delivered the final and fatal blow.

If NASSCOM is to be trusted, there haven’t been any massive layoffs, and the fifty-odd thousand employees being asked to leave is an annual process. Clearly, the presence of managers and professionals in the Indian IT Sector is no surprise. If you are from the IT Industry and are reading this article, there is a huge probability of you having already come across someone at a junior or senior level who wasn’t worthy of the job. Some employees, lacking the basic communication skills, held important positions within these companies. Bad ratings, appraisal arguments, and automation have helped IT Companies get rid of employees unfit for the job, with this year the layoffs being more than what we usually see each year. One may believe the NASSCOM, but the truth remains, the firings are in surplus this year, but wasn’t this on the cards?

H1B Visa Programme for the likes of Tech Mahindra, Infosys, TCS, and HCL is a way for these companies to bag lucrative projects abroad, expand their work territories geographically. TCS has been sending workers to the UK on a regular basis to work closely with Jaguar, and with Brexit last year; one can expect a decrease in the workforce being sent abroad in the following years.

Similarly, with the incoming regulations on H1B Visa Programme recommended by President Donald Trump, things are going to get difficult for IT nerds looking for opportunities abroad.

Unemployment, by definition, is when there is no job creation on an absolute level. Unlike the 2008 recession or the Great Depression of 1929, when the markets across the world crashed and the world was plunged into an economic crisis, the global economy is currently in a recovering mode. Therefore, the layoffs in India are more about job displacement than job decimation. Infosys, which has announced layoffs in India, alongside other tech-giants, is all set to hire over 8-10,000 employees in the United States, as per its CEO, Vishal Sikka, who also discussed the possibility of additional tech hubs in the US. For over 20-years, Americans relied on us for cheap IT Labor, and with the emergence of Donald Trump, they now want to do their own dirty jobs. Turns out, India’s IT lease has expired.

The Indian IT Industry isn’t all about Infosys, TCS, HCL, and its gigantic counterparts alone, for there exists a dense jungle of smaller companies, with an employee strength ranging from twenty to one-thousand people. These companies, heavily, rely on online portals like Upwork and PPH (People Per Hour) to garner projects. Some companies carry out extensive marketing campaigns to hunt down their clients, spending around close to $1000 daily on marketing through ads on Google and Facebook alone. Unlike the projects in the likes of HCL, these companies work on projects that can often be completed by 3-5 people, or even a single person (I have worked on many such projects, alone). With the payments being made on an hourly basis, some projects come with an earning of less than 500 INR, and these second tier companies grab them with both hands. Alongside, many freelancers have also made careers out of these portals, while some have carved out an entire company working on such projections over a longer duration. In this jungle, it all comes down to quantity, with quality taking the back seat. Eventually, even this jungle will be consumed by excessive deforestation that shall occur as a result of automation.

As layoffs occur in the IT Giants of India, thela industry must prepare itself for the shockwaves that shall soon paralyze the 2nd-tier companies of India. Displaced employees from the likes of Cognizant shall look to find relevance in these smaller companies, increasing the competition for even those jobs that do not pay handsomely. Given the rampant unprofessionalism in the 2nd-tier IT companies of India, dynamic hiring and firing are quite common, and with a surplus of potential employees, this will increase, leading to volatility in the sector as a whole. This shall also have an adverse impact on the education of the professionals working in the IT Sector, and may push the flow towards jobs in the government sector, especially those of State Service Commission, SBI, IBPS, and so on. Is the Government of India ready to tackle such a rush?

Is Prime Minister Narendra Modi to be blamed for this IT Jobs crisis?

Yes, for he ensured the dependency of the IT Industry largely on America for 20-years, for he asked the IT Giants to have a huge bench strength, for his Gujarat Model inspired colleges and companies to make a business out of recruitments, for he went to the United Kingdom and ensured Brexit happened, for he met the Russians and influenced the US Elections and made Donald Trump the President, and for he asked Donald Trump to go protectionist and regulate the H1B Visas. Alongside, he also improved the prospects of automation by hacking the EVMs, and therefore, he must resign, for Kejriwal deserves to win 400 seats in the Lok Sabha and bring back the good old days of the noble Aurangzeb.

Jokes apart, one of the biggest concerns during the UPA-II reign was the ease of doing business for startups and existing companies. Countless bottlenecks and bureaucratic hurdles had made it impossible for startups to function. The infamous scams by leading Cabinet Ministers were enough motivation for investors to stay away from the country. Manufacturing wasn’t the core focus, SMEs (Small and Medium Enterprises) suffered from a lack of credit and government assistance, and the employment generation process had reached a saturation point. Who can forget the rumors and unconfirmed reports about some of the biggest tycoons planning to move their business out of India. Had it not been for the booming IT bubble to cater to thousands of graduates each year, we would have thought about course correction much earlier than now.

India must look beyond the IT Industry when it comes to private sector employment. For years, we have largely catered to a nation of 300-million people. Assuming the market size being catered was 20% of the population, we, as a nation of 1300-million people, found dependency on a market of 60-million people (the market from countries other than the US could take double this optimistic figure).

Leveraging the inefficiency of the West to fix its own dishwashers or mobile phones, we have come a long way, but now, we must look further, and this is where Prime Minister Narendra Modi comes into play.

To boost employment, we must enhance opportunities for business. Donald Trump or Theresa May or Narendra Modi cannot create job positions, and neither could the Indian National Congress, but what these 3 prominent world leaders must do is enhance the atmosphere for conducting business, quite unlike what the INC did. Donald Trump is moving back to coal (dumb move) and regulating H1B Visa Programme for a start and Theresa May will be looking to negotiate a deal to leave the EU and boost employment back home. However, like always, the biggest challenge lies for Narendra Modi for he must take into account the aspirations of the youngest nation on Earth when it comes to employment. The wages must parallel the growing economy, and for that, India must look within to create markets.

China and other nations in the South-East Asia are fast emerging centers for cheap IT labor (Yes, cheaper than India). However, India, under the leadership of Narendra Modi has strengthened its business atmosphere in the last two-and-a-half years. With ease in electricity accessibility, numerous state reforms, push for a digital economy, easier procedures for the import and export of goods, trade MoUs with countries in the East and Africa, easing FDI investments, and numerous state reforms at a micro-economic level have given a boost to the economy, as certified by the World Economic Forum in its ‘Ease of Doing Business’ Index. Alongside, the implementation of GST and Banking Regulation Act will help India make a better tax regime and also decrease the accumulation of Non-Performing-Assets in the long run. However, for Narendra Modi, a lot of homework remains to be done, especially when it comes to capital lending and curbing corruption. Thankfully, we have left behind the pre-2014 pessimism.

The above factors cited by the World Economic Forum must be worked upon to create more employment opportunities in India. Clearly, the role of the government is going to be critical, but it’s important for people without jobs or still in college to work on their skills and be open to learning even in their late 30s.

The GOI must act as a catalyst to help private sector explore opportunities in sectors dealing with Climate Change, given how floods wreak havoc each year in India, in sectors relevant to the flora and fauna of India, for that could help our tourism prospects, in areas of disaster management, in green-energy, and architecture. Focusing on projects in clean-energy could boost the prospects of young graduates. Advertising remains largely unexplored in India when it comes to global competition, for we haven’t managed to make IPL as big as the Super Bowl. Cyber Security, Big Data, Telecommunications Data Sciences, Genetics and Genomics, Bio-Engineering, Drug Research, and countless other sectors, the list can go on forever, await the young minds of India for their intelligence could foster innovation. The government can assist with ease of business, where India still must do a lot more, and is, but the onus shall lie with the private sector for its time for it to reinvent itself, or else, descent into complete chaos.

A recent report in the ‘New York Times’ how multiple companies in Hollywood working on special effects were shutting down for the producers had found cheaper alternatives elsewhere, even in India. Infosys, TCS, Tech Mahindra or any company for that matter may take away all its jobs tomorrow, for it can, but as a nation thriving to be a global economic leader, we must not constrain ourselves to a single sector to judge our employment prospects. If Indians are losing IT Jobs, Americans are losing animation jobs, and given how Hollywood was once the nucleus of special effects, they have no option but to cope up with the changing dynamics of globalization.

We can blame Narendra Modi as much as we want to, but the unemployment crisis right now was a time-bomb waiting to explode, and it was planted much before Narendra Modi arrived as the CM of Gujarat. The Americans, someday, were going to want back their jobs or were we too naïve to assume otherwise?

Sharmaji’s son has been an engineer for long now. Perhaps, too long?