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Indian Economy in 2023: How Tech Sector Layoffs Is Having an Impact?

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Tech Sector Layoffs in Indian Economy in 2023

Reasons for Layoffs in the Indian IT Tech Sector, Despite Booming Indian Economy

How Can Techies Protect Themselves from Layoffs?

What Should Tech Companies Do in the Layoff Environment?

Conclusion

Despite a growing Indian economy, the news about layoffs is worrisome – especially in the tech sector. In 2023, the tech industry experienced a substantial wave of layoffs, impacting major players such as Google, Amazon, Microsoft, Meta, and Twitter, with a cumulative total surpassing 100,000 employees. The recent surge in layoffs within India’s tech sector raises concerns about its broader economic repercussions in 2024.

The alarming statistics reveal a substantial increase in job losses, particularly in key industries. Get an idea about the implications of the layoffs in the Indian IT Tech sector and their potential impact on the Indian economy.

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Tech Sector Layoffs in Indian Economy in 2023

Despite a boom in Indian economy, the year 2023 has proven to be a challenging one for India’s startup ecosystem, witnessing a surge in layoffs that has left nearly 11,000 employees grappling with pink slips. According to data from the layoff tracker layoffs.fyi, as of June 26, 2023, a staggering 10,774 employees have been laid off, marking a 40% increase from the previous year.

Also read – Indian Economic Growth Story: Top Factors Leading to India’s GDP Expansion in FY22/23.

While India’s tech layoffs represent just less than 5% of the global total, the sheer number — nearly 70 startups involved — underscores the magnitude of the issue. The ed-tech sector, in particular, faced the brunt, accounting for over a third of the layoffs. With 3,610 job losses, the sector saw major setbacks, notably with Byju’s contributing 2,500 layoffs alone, having executed two significant layoffs in February and later in the year.

The impact extended to other sectors, with the food sector sacking 1,910 employees, primarily due to Reliance Jio Mart’s decision to cut 1,000 jobs in May. The retail sector also experienced a downturn, shedding 1,272 jobs. The arduous task of bouncing back after a layoff is exemplified by stories like engineers from Bengaluru, despite being a top performer, struggling to secure a new job. This was unsurprising, due to heightened competition in the job market flooded with laid-off engineers.

The global context adds another layer to this narrative, with tech giants like Google and Microsoft announcing substantial layoffs. Google’s parent company Alphabet Inc revealed plans to cut up to 12,000 jobs, citing investor withdrawals and reduced customer spending due to the impending recession. Microsoft, too, opted for a 5% reduction in its global workforce, anticipating a recession’s impact on client demand in the computer business.

Reasons for Layoffs in the Indian IT Tech Sector, Despite Booming Indian Economy

This sweeping trend is driven by several factors, signaling a paradigm shift in the once-booming tech sector.

  • A noticeable slowdown in the industry’s growth trajectory, marked by mounting inflation in the Indian economy, a global chip shortage, and the lingering COVID-19 pandemic – all these have collectively contributed to a lesser demand for tech products and services.
  • The overstaffing that occurred during the pandemic further compounds the issue for companies, responding to surging demand for remote work, hired aggressively after the outbreak of the Novel Coronavirus, only to land up with an excess of employees as the pandemic wanes.
  • Also, despite a lack of substantial evidence, some companies have the notion that layoffs can swiftly enhance profitability. Cost-cutting emerges as the final driver of the layoffs, as tech companies seek ways to trim expenses in the face of a challenging landscape. This makes it a popular short-term strategy, regardless of its actual impact on organizational and sectoral health.

The repercussions of these widespread layoffs reverberate throughout the tech workforce. Many skilled professionals find themselves unemployed, while those who remain endure an atmosphere of uncertainty even in a growing Indian economy. The industry, as a whole, suffers as it loses valuable talent, making it increasingly challenging for companies to attract and retain top-tier employees.

How Can Techies Protect Themselves from Layoffs?

In these uncertain times of potential layoffs, tech professionals can adopt these proactive strategies to safeguard their careers.

Knowledge of industry trends

Staying abreast of industry trends ensures marketability and readiness for industry shifts. Understanding industry dynamics and having a network of mentors can guide professionals toward resilient career paths. Identifying their company’s risk factors, from economic recessions to shifts in consumer tastes, can allow employees to anticipate challenges and take preventive measures.

Skills development

Developing new skills enhances value to employers and bolsters marketability in the event of downsizing. HR experts emphasize the importance of upskilling and networking for those affected by layoffs.

Diversifying professional connections

Building robust relationships within the tech community fosters connections and opens avenues for new opportunities during challenging times. Gen Z individuals are encouraged to diversify their professional connections, and know about industry trends and changes in the Indian economy even while being employed.

Establishing a backup plan

Having a backup plan, whether through saving money, cultivating a side hustle, or networking across industries, offers a safety net amid economic uncertainties.

Staying positive, both physically and mentally

Despite the uncertainties in the ever-evolving landscape of the tech industry, staying positive is essential. Tech professionals should maintain a positive attitude, take care of both physical and mental well-being, and embrace a culture of continuous learning and growth.

Read on – How Has the Indian Stock Market Performed in the Last 10 Years?

What Should Tech Companies Do in the Layoff Environment?

Companies can mitigate the impact of layoffs by implementing thoughtful strategies.

  • Offering early retirement packages and voluntary layoffs provides employees with choices. Severance packages and outplacement services can ease the transition for affected staff, minimizing insecurity and anxiety.
  • Diversifying supplier bases and maintaining comprehensive insurance coverage help companies navigate challenges arising from natural disasters.
  • Moreover, staying attuned to industry trends, changing demands in the new Indian economy and consumer preferences allows proactive adjustments, reducing the likelihood of abrupt layoffs.

By prioritizing employee well-being and employing strategic measures, companies can navigate economic uncertainties while fostering a positive corporate culture.

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Conclusion

The reasons behind the large-scale layoffs are varied in the present Indian economy, ranging from the anticipation of an upcoming recession to the pressure from investors seeking expense reduction. As the tech sector faces unprecedented challenges globally and in India, the repercussions on employment and the broader economy become a critical area of concern for 2024.


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