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IT sector: ‘Despite headwinds, performance-linked job loss in range’

YB WEB DESK. Dated: 5/19/2017 12:52:46 PM

In spite of the uncertainty on visa-related issues in the US, slowdown in key geographies and the growing need for more specialised skills, India’s software services industry has stated that employee departures this year are in line with previous years — pegged to be in the range of 0.5 to 3 per cent on company level and largely driven by performance-related factors. Even as the staff attrition on account of annual appraisals was in the said range and are largely restricted to the bench strength, two of the top firms have denied any mass layoffs.
“There are no layoffs at Infosys. The separations taking place are performance related. Our performance management process provides for a bi-annual assessment of performance. Therefore, as part of this regular process, performance assessments are done with reference to the goals individuals have on business objectives and other strategic priorities for the company. A continued low feedback on performance could lead to certain performance actions, including separation of an individual and this is done only after feedback. We do this every year and the numbers could vary every performance cycle. We continue to hire from campuses and add lateral hires to the company,” an Infosys spokesperson said in response to an e-mail query sent by The Indian Express.
Nearly 62 per cent of Infosys’ revenues in FY17 came from clients in North America, including the US, where tightened norms for H-1B visa has created pressure on Indian IT firms.
Wipro too rejected the layoff claims, and said: “Wipro undertakes a rigorous performance appraisal process… to align its workforce with the business objectives, strategic priorities of the organisation, and requirements of our clients. This systematic and comprehensive performance evaluation process triggers a series of actions such as mentoring, retraining and upskilling. Regular feedback and multiple opportunities are provided for improving the performance. The performance appraisal may also lead to the separation of some employees from the firm and these numbers vary from year to year”.
Furthermore, Nasscom on Thursday, refuted the reports of mass layoffs in the sector, but said that its member companies and their employees need to “re-skill or perish”, considering the challenges on account of automation; and contraction in profit margins due to tightening visa norms across various geographies and slowdown in key markets.
“We are not a not-for-profit industry, that we sit and say that fine, the job is your right. We are for-profit and competitiveness is critical. People who do not perform, and do not live up to the expectations of customers are forced to let go, after we try to retrain them, and give them an opportunity to retain their jobs. That number ranges from 0.5 to 3 per cent at a company-level. This is not the number at the industry level,” Nasscom chairman Raman Roy said.
Roy also that IT firms in the country were making “huge investments” in training their employees about newer technologies to ensure they stay up to date. “The need for re-skilling talent is a reality that we have to address. To keep up in a fast-evolving technology environment, the IT industry must reinvent itself by re-skilling its employees in new and upcoming technologies,” he said, adding that over 40 per cent of the 3.9 million people that the sector employs, would need to be re-skilled over the next five years for them to keep their jobs.
Nasscom said it has identified new skills such as big data analytics, cloud and cyber-security services, internet-of-things, among others as areas that would create job roles going ahead. It also said that a number of its member firms including TCS, Infosys, Accenture, Genpact were undertaking a skills initiative that looked at training employees across all levels. “This skilling/ re-skilling initiative will translate into 1.5-2 million people working on next-gen technologies in India within 4-5 years,” it said.
Automation is another threat. In February, Infosys CEO Vishal Sikka had said: “… all you have to do is walk into any one of our floors at any company in the IT BPO industry and it becomes starkly clear as you walk around the floor that a huge number of these jobs are going to go away. It may not be two years, it might be four years, five years, seven years, ten years, but there is no doubt that these jobs are going to be replaced with automation.”
He added that the industry has to eliminate its work via automation, and improve its productivity. This was also reflected in the net hiring growth rate of the IT secotr, which is witnessing a deceleration, Nasscom said. According to a presentation by Nasscom in early 2000s, net hiring grew in line with rising revenues. However, since 2008, the gap between the revenue and hiring growth has been widening. In FY15, the sector witnessed hiring of 2,17,000 employees, which came down to 2,05,000 in FY16, 1,73,000 in FY17, and Nasscom expects the net hiring in FY18 to be around 1,50,000.
The industry body also admitted that automation would cannibalise jobs in the sector, but would also create new job roles, ultimately resulting into a net positive employment.