Major Layoffs Ahead in Indian IT Sector, Says Report.

The report says the jobs will be lost due to greater automation and jobs requiring newer fields such as machine learning, artificial intelligence, and higher levels of engineering skills.

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Major Layoffs Ahead in Indian IT Sector, Says Report.
Major Layoffs Ahead in Indian IT Sector, Says Report.

Donald Trump’s tightening of the screws on H1B Visa has impacted the Indian sector majorly. According to Goldman Sach, India was the top beneficiary of the H1B Visa, accounting for 195,257, or 70.1 percent, of all beneficiaries of the H-1B visa program in 2015. 

One IT employee based in US said, “It does not seem like Indian companies are laying off in India so they can hire in the US.”The IT sector has been struggling, these companies have been having poor disappointing earnings/lower guidance for a few quarters now and that is probably the primary driver.”

If we buy this view, it says the companies lying off more because of their poor performance, rather than the new H1B visa rules, and visa factor is just an alibi.

The IT giants like Tech Mahindra, Cognizant, and Infosys have announced redundancies this year and there is expectation that they would implement string of layoffs in next couple of years. According to a report from McKinsey, at least 200,000 Indian software engineers would be laid off in the coming three years.  

The report says the jobs will be lost due to greater automation and jobs requiring newer fields such as machine learning, artificial intelligence, and higher levels of engineering skills.

“When this happens, the benefit from cost savings by hiring in a cheaper country is likely eclipsed by the skill requirements. I am not going to pretend to fully understand it,

but there is a reason that product-based companies like Microsoft, Google, Facebook etc. do not outsource most of their jobs to India, but have the majority of their workers in the US. There is apparently a skills shortage in India for these types of more complex jobs. India produces lots of engineering graduates, but not enough highly qualified ones. They may not be able to handle the step up in work/skills required,” says the report.

According to Goldman Sach, the holders of H-1B visa should be given minimum salary of $60,000. A specialized bachelor degree will also be required by the holders of H-1B visa for the offered position. 

Growth Enabler’s Malhotra said, “The H-1B talks have led to speculation and that is causing a stir in India. The proposed changes to H1B visas will also impact American tech companies, such as Google, and Microsoft, increasing their costs, and potentially leaving them with a skills deficit.”

He, however, noted that H-1B visa workers can continue servicing their U.S. clients from India using advanced tech collaboration solutions and virtual working practices.

“The net impact being that cross functional and multi-regional teams will collaborate seamlessly with minimal disruption.”