BENGALURU: Layoffs and hiring freeze in start-ups and big tech companies are back in limelight amid global slowdown. While big companies have already announced layoffs and are planning further job cuts, start-ups are announcing layoffs either over email or in town hall meetings.
Last week alone three start-ups have fired employees. After an acquisition deal with PhonePe fell through, ZestMoney laid off about 20% or 100 employees and this was announced during a town hall meeting. Healthtech start-up Practo fired 41 employees. Delivery platform Dunzo also fired 300 employees. Start-ups are downsizing to conserve cash amid funding scarcity.
As per various reports, over 24,000 employees have lost jobs in Indian start-ups till now since 2022. Layoffs.fyi, which compiles data from public reports and tracks layoffs, says 566 tech companies globally have fired over 1.68 lakh employees in 2023 alone.
IT companies are going slow on hiring, but will there be any layoffs in Indian IT companies as well? Accenture has already announced 19,000 job cuts globally. “The conditions that triggered the layoffs since last year have been largely unprecedented and unexpected. Any projection of layoffs for the year ahead could hence be tricky and misleading if quantified. However, we have reason to believe that the large waves of layoffs are now in the rear-view mirror,” said Kamal Karanth, co-founder, Xpheno, a staffing firm. “Enterprises going through large-scale layoffs are also the ones who engaged in overhiring and talent hoarding during the buoyancy of 2021 and early 2022. Layoffs by big players are largely akin to shedding excess flab that is difficult to hold amidst current market trends,” he added.
Karanth added that while corrective resizing and workforce optimising as calibrations would continue across sectors, hiring action would also be in play as enterprises need to maintain their real critical mass for efficiency.
Not all gloomy for job seekers
Though experts say that there would be layoffs in the coming months too, they also say that certain sectors are attracting more jobs. Recently, TeamLease Services released its Employment Outlook Report for the Services and Manufacturing sectors for the first quarter of 2023-24. The report says despite the ongoing global turmoil, hiring intentions in Q1 FY24 is 10% higher compared to the same period last year. However, compared to Q4 FY23, the hiring outlook has witnessed a 4% dip.
The report projects a strong outlook for entry and junior-level employees, in both Service (73% and 71%, respectively) and manufacturing (49% and 55%, respectively) sectors. Kartik Narayan, CEO – Of staffing, TeamLease Services, said, “Industries around the world, including those in India, have been severely affected by the current global unrest resulting in large-scale layoffs and a hiring freeze. Despite this, hiring prospects in India have continued to improve over the past year, with 64% of employers in the service and manufacturing industries expressing a positive outlook on hiring.”
Hiring in IT and start-ups
Randstad’s recent Startup Hiring Trends Survey in collaboration with FICCI has shown that a significant proportion (80%) of early-stage start-ups with a current workforce of fewer than 20 employees are actively seeking to expand their workforce in 2023.“We believe that this momentum will continue in FY24 due to strong prospects of post-pandemic recovery in start-up and allied sectors,” said Yeshab Giri, Chief Commercial Officer, Staffing & Randstad Technologies, Randstad India.
“FY2024 has taken off on a slow-foot for hiring action, with Active Talent demand dropping by 10% - 12% over the previous month. As a key talent-consuming sector, the IT sector’s current active jobs volume is 56% lesser than in the same period last year. Hiring by the tech startups cohort has been in low gear since the second half of 2022. The current active talent demand from start-ups remains in the low 15,000-17,000 range, amidst extended funding winter,” Karanth said.
On the non-tech front, according to Xpheno, the BFSI sector currently shows its first drop in volume over six months. With a 25% month-on-month drop in active openings, the BFSI sector broke its streak of positive growth figures seen since September 2022. “Other non-tech sectors like Consulting & Professional Services, Education, Media & Advertising, Manufacturing, Health & Wellness, Infrastructure, Telecom etc. continue to put out active openings and make up for the drop in numbers from the tech Sector,” he added.
Other sectors like Retail, Goods & Logistics, BPO & Consumer Services and Automotives continue to contribute by adding more active openings. These sectors are expected to remain positive on their hiring action going into FY2024.
Jobs that are in demand
Active white-collar openings for freshers have recovered since the lows of September and October 2022.
“The current volume of active demand for freshers and entry-level talent is in the 70,000 to 80,000 range. About 40% of this active demand is in the tech function and the rest spread across functions like Sales, BD, Marketing, Finance, Engineering, Customer Support, Operations and Administration,” Karanth said. The active openings for freshers are spread across a wide range of sectors like Health & Wellness, Infrastructure, Telecom, Goods & Logistics, Retail and more. Depending on the sector and function, entry-level packages are largely in the Rs 3- 6 lakh bracket.
“For FY24, it is estimated that the Indian IT sector will hire 350,000 to 400,000 employees, with a good mix of freshers and lateral hires. There will also be an increased demand for tech skills such as data analytics, data visualization, data science, full-stack development, and Cloud & DevOps, creating ample opportunities for talented individuals with relevant skills to find employment in India,” Yeshab Giri said.
As far as fresher hiring is concerned, Randstad anticipates FY24 to display an uptick, especially in the IT sector. Entry-level salaries in this sector would range anywhere between Rs 3.5 LPA and Rs 7 LPA.