KOCHI: Talk of recession and consequent layoffs have rattled the IT sector across the globe. Some of the world’s biggest tech companies have collectively laid off more than 1,50,000 staffers in recent months, according to tracking site Layoffs.fyi.
Microsoft laid off about 10,000 employees. Google’s parent company Alphabet also announced plans to trim its global headcount by 12,000. Twitter reportedly fired half of its employees, after Elon Musk took over the microblogging site.
These figures made headlines. And, understandably, there have been rumours of ripples in India as well. Here, we look at how Kerala’s IT sector has been holding up. The global slowdown has, so far, had only a “slight impact” across India, says Thiruvananthapuram-based IT consultant Renjith Ramachandran. “The impact is not that evident here,” he adds. “There is just a minor dip in terms of new projects. The number of layoffs – not just in Kerala, but across India – has not been alarming.”
Notably, the IT sector was buoyed by record revenues and a hiring spree after seven months of the pandemic. Lavish perks and record salaries followed. “Salary hikes ranged between 30 and 200 per cent,” notes Renjith. “However, with the slowdown of new international projects, some companies are likely to shed manpower. This is more likely to happen in the case of small-to-medium scale companies.”
Steady growth expected
A top Technopark official also believes the Indian IT sector is unlikely to see aggressive layoffs. “And the scene in Kerala is not panicky,” says Sreekumar V, GTech secretary and centre head of Tata Elxsi at Technopark.
He adds that the current hiring rate across India can be compared with figures in the pre-covid times. There was a boom following the first pandemic wave, with projects gushing into the country. “That boom phase reached its saturation point about seven months ago,” says Sreekumar. “So, naturally, the Indian IT sector is being cautious in terms of hiring, bearing in mind the possible difficult times ahead… this has been the psyche of Indian industries,” says Sreekumar
The performance of Indian IT firms – particularly those in Kerala – has matched expectations in the current financial year, he adds. “In the next fiscal, despite the global slowdown, the growth is expected to be good when compared with the average over the past 5 years,” says Sreekumar. Secretary of Prathidwani (IT employees’ welfare organisation), Vineeth Chandran, echoes similar views. “Mass layoffs are unlikely,” he says. “But, hiring has come to halt. Even replacements for employees who quit are not being considered,” he says.
‘Domestic boost’
A Balakrishnan, executive director of Geojit Financial Services and director of Geojit Technologies, Ernakulam, does not foresee a major tumult in the Indian IT sector. “The Indian IT sector does not cater to the West alone,” he says. “The rise in domestic requirements has come as a shot in the arm for the Indian IT sector. Software development, modernisation of applications, robotic process automation, cloud migration, etc. are some of the areas witnessing domestic thrust.” Balakrishnan also highlights a FITCH report that states the Indian IT sector can expect a stable 2023.
Infopark employee and tech analyst Kiran Thomas expects stability in Kerala’s IT sector, too. “There is no boom this year. Things are likely to be stable. Even if layoffs happen, the industry itself will be able to absorb,” he says. “There could be internal restructuring; employees may be assigned to different projects.”
Kiran, however, adds that some fresh contract employees may have to bear the brunt. “Their contracts would not be renewed. Such firing happens,” he says.
Startup scene
Kerala Startup Mission CEO Anoop Ambika says there are no major repercussions of recession in the domestic IT sector. “People are hiring and good resources are getting at least 30 to 40% pay hikes,” he says.
Anoop, however, points out that there has been a fall in startup funding in Kerala. “We need to create a quality pipeline, with a steady flow of new startups. If we are able to create companies that can compete globally, funding will automatically increase,” he says.
Safil Sunny, founder and CEO of a startup named Tranzmeo, says many investors are stepping back from projects due to global uncertainty. “This has been happening since the beginning of this year. Investors are waiting for the global markets to bounce back,” he adds. “On the positive side, there is a larger talent pool now for startups that have cash flow.”