IT companies look to cut jobs in India as hiring in US rises
11 November 2019
As pressure of hiring in the United States rises, information technology (IT) services companies with large Indian presence are looking at reducing their employee count in India, in what is seen as a shift of jobs from India to the US.
And as the domestic labour market tightens, US companies are perhaps witnessing the biggest talent crunch in the technology sector. In fact, the US labour market, especially for technology jobs, has been expanding for the past few years.
US companies had reported about 918,000 vacant IT positions in the past three months, The Wall Street Journal reported citing federal employment data analysed by CompTIA, an IT trade association.
US companies are investing more in tech to drive business initiatives and, in the process create new jobs and build new departments.
For Indian IT companies, however, price discounts on the core business, increased hiring in the US and emergence of new technology areas tend to increasingly press margins in key areas of operation.
In India, on the other hand, IT companies are looking at annual reduction in middle and senior levels by 5 to 8 per cent in the coming quarters. For a large company employing lakhs of people, this could add up to 10,000-20,000 people.
And this is happening across all tier-I IT services companies. Employees in the senior project manager or delivery manager kind of roles, where the annual salary range is Rs20-40 lakh, are facing the maximum risk, reports citing senior IT industry officials said.
This has already begun — Cognizant has said it plans to cut by around 12,000 staffers in the next few quarters.
It was first reported at Cognizant, and, according to reports, Capgemini followed it up by cutting its workforce by 500 in India as customers scaled back projects.
Capgemini has 1.08 lakh employees in India, more than half of its global strength. The company says it is part of a constant process of reskilling, reassignments and arrivals.
Infosys, India's second-biggest information technology service provider, said it is laying off employees in the mid and senior level to reduce employee cost and flatten the top-heavy organisational structure.
The company is targeting $100-150 million in cost savings this financial year. The company is focused on adding more jobs at the bottom-end of the pyramid by hiring freshers.
Apart from adding more of new graduates, all big IT firms are aggressively localising their workforce in the US, from where they are drawing at least 65 per cent of total revenue.
Infosys has hired 10,000 locals in the US over the past three years and plans to add another 1,000 Americans by 2023. Wipro's current localisation level in the US is over 65 per cent.
While IT firms are reducing headcount in India, they are hiring in the US. The cost of hiring an American worker is close to three times as compared to an Indian engineer. That is the reason all top-tier IT companies are cutting costs.
Forced to hire more in the United States, major IT companies, including TCS, Wipro and HCL, are doing a balancing act by cutting jobs in India and beefing up in new areas of digital technology and AI.