IT Layoffs: Blame on Technology Change

Some random thoughts on Information Technology industry layoffs. Trends projected and analysed by business media shows that there are more layoffs in the pipeline than what we have seen until now. To take a broader viewpoint, going back in times, IT industry was seen as a threat to existing employment. Economists and technology admirers thought IT industry growth is progressive, unstoppable, modern and tops the narrative on development. Politicians embraced this argument fully, and have shaped their careers accordingly. We are seeing more IT-eccentric decision-makers than before.

Yet, never, ever, neither the economic trend analysts or economic weather monitors have warned that IT itself is vulnerable to technological change. Only recently, especially with the globalisation process getting diluted by rising national protectionism, especially by rich countries, there is talk of technological change in IT industry. However, none is ready to blame the failure of globally-linked economic system, and lesser acknowledgement that the basics of globalisation have been faulty. It is highly ironical to note that current layoffs in software industry is linked to backwardness in dealing with technology changes, than to economic conditions. We know that IT industry, in the past, has attracted youth, and thus displaced more employment elsewhere.

Secondly, Indian software companies have been pampered with subsidies and labour rule liberalisation. For years, they did not pay taxes or paid lesser taxes, and had not faced any restrictions that are typical to any manufacturing sector. Importantly, they had no cost regulation. No government department had any inclination or wherewithal to take a peek at software product prices. In fact, governments across India have learned the art of paying exorbitant prices to software companies, for pittance. To cite, a rudimentary website, and minimal AMCs, cost a dime for public exchequers. All areas, where software companies are housed, get good roads and the best infrastructure, in comparison to other parts of the same city. Governments have established Consultative Committees with IT industry, to enable and facilitate their growth.

Presently, central government is on the active mission to increase business for software giants through digital india programme. Principally, it has imposed restrictions on non-digital financial transactions, and has been encouraging digitisation aggressively.

Public funds, actively and passively, directly and indirectly, have been used with the sole purpose of promoting employment. However, receivers of this largesse are ready to question any regulation. Even if they start laying off on a mass scale or small scale. When the very purpose of employment provision is threatened, can public funds be continued to extended to them?

All this has enabled growth, and also fattening of companies, promoters and investors. Maybe, employees as well. However, among all the core stakeholders, employees seem to be more vulnerable and employment seems to be the first option for any chopping. Why? NASSCOM and other industry associations would churn out very reason, except the liability clause. They would now say employees are not up to date with the technological changes. They would even say they picked sub-standard college finishers and turned them into skilled employees, not mentioning about the government’s investment on skill upgradation, and claim a right to give a pink slip when the business conditions does not suit them. There is no discussion on their lethargy in updating themselves, or ‘bad’ decisions when the going was good.

If any reader is worried that this seems to be anti-software industry tirade, he/she should remember that governments have been promising and built infrastructure that suits the growth of software and IT employment. This at the cost of other manufacturing sectors, and traditional value chains. Indian youth aspirations and dreams are continuously being built around software employment. For this reason, software layoffs need to be discussed and analysed. Same kind of discussion is required on other sectors. With India teeming with youth, employment becomes more and more critical.

Current layoffs in software industry cannot be pushed under the carpet, as BAU and part of regular, annual purges, as NASSCOM wants us to believe. Companies have to be made responsible, and they should be asked to file annual employment reports with the government. Consultative Committees of IT industry, in each of the States, should be informed by the companies about layoffs, and procedure for layoffs should be laid down, with prior, advanced intimation to the ‘targeted’ employee being mandatory.

 

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