India's IT sector had been struggling to retain employees with a 22 per cent rate of attrition in 2022, as tech firms in the rest of the world were laying off employees. But now the spectre of job cuts haunting tech professionals across the globe, has cast its shadow on India's IT industry, which faces a slowdown in the pace of new deals. To ensure productivity of their respective workforces, top companies may have to let employees go, if they wish to avoid shrinking margins.
According to experts, major players in IT including Infosys, TCS, and HCL Technologies, were struggling to keep up with a sudden rise in new deals after the COVID-19 pandemic. This was an issue due to an unprecedented surge in demand for trained professionals for largescale digitisation, which encouraged employees to look for opportunities elsewhere.
To cater to more traditional businesses embracing tech, IT firms brought new employees on board at any cost, which including retention incentives, bonuses and stock options. But the sudden enthusiasm for tech services was bound to cool off, and this has left tech firms across the globe with too many employees with not enough work.
Indian firms have been immune to the layoff wave, but employees are more careful about switching jobs in the current global environment. Lower attrition will increase operating margin, triggering a dip in sub-contracting costs and annual salary increments.
But while low attrition can help keep the workforce stable, new deals from abroad drying up due to recession, will force Indian firms to cut down their staff. New age tech startups have already fired more than 18,000 people and IT giants such as Wipro, which sacked employees over moonlighting, won't shy away from laying them off to cut costs.
