The Information Technology has been the bedrock of urban employment in India for close to two decades now and it still continues to be one of the most important business sectors. However, over the past weeks the layoffs in the Indian IT sector have gone on unabated and that has become a cause for concern for many investors. Is the sector going to go through a long drawn out recession? Are there going to be more job losses? How much of it has been caused by global headwinds? This feature is going to give you a closer look into the situation and try to make some sense of it.
It all started with the sackings at Twitter earlier on this month after new owner Elon Musk made his presence felt. As much as 50% of the total workforce was sacked and that amounted to as many as 3800 employees. Almost the entire workforce at Twitter India was sacked with little notice. In addition to that around 4000 contractual workers had also been sacked. The resignations continue at Twitter as Musk sent out a companywide email asking those who were not going to devote long hours to quit.
However, that was only the tip of the iceberg as not too many days later Meta, the parent company of Facebook, announced that it was going to lay off a whopping 10000 employees. This time the reason was that Zuckerberg had hired too many new employees in his push towards making Meta the king of the metaverse. The company had hired aggressively, spent billions but it had not shown any returns.
- However, the layoffs were not only restricted to such big names. Such a climate is almost certainly going to have an impact on India and it has already started in the IT sector. A slowing global economy, rising interest rates and decline in spending have all contributed towards this particular state of affairs.
- This state of affair has been felt acutely in the Indian IT sector and although the first quarter of the year recorded 1010 layoffs, things have progressively become worse.
- However, things got progressively worse in the second quarter as 5520 employees in the IT Sector got the axe from April through to June. The total number of companies which laid off employees in second quarter numbered 22.
- The education technology or edtech sector has been particularly hit hard. Unacademy fired as much as 17% of it workforce in April this year. Layoffs were also recorded in the second quarter at Vedantu, WhiteHat Jr and Byju’s among others.
- The situation continue to be the same in the July to September quarter as 2210 employees lost their jobs. Ridesharing company Ola alone laid off 1000 of its employees. Even before the Twitter India layoffs, the number of IT employees who lost their jobs in October and November totaled 3093.
- Things have not been as bad at some of the IT majors but layoffs are happening all the same and that is something that is usually an indication of the current weakness in the sector.
- Despite the weakness in the sector at this point, it should be noted that the Indian IT sector has weathered storms in the past and returned strongly. Hence, it may not yet be a sector that investors with a long term outlook should shun.
Invesmate seeks to provide you with actionable information about the latest situation in the Indian business sector so that you can make informed choices as an investor. Look around for our next feature.
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