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Indian IT to cut 1 lakh jobs in 6 months; Will require 3.5 Million by ’20!
ST Team
Saturday, May 2, 2009
More than one lakh people employed by IT firms in India are likely to be forced out by using stringent yardsticks of performance in the next six months. With over 22 lakh people employed in the industry, this series of lay offs, due to persisting fall in global demands, will affect five percent of the total IT workforce in the country. On the contrary, another study indicates that there is going to be a conspicuous dearth of 3.5 million employees in the Indian IT arena by 2020.

“We expect the IT industry to see 3-5 percent non-voluntary exits in the first two quarters of the financial year, mainly in senior and middle levels,” says P Thiruvengadam, Sr. Director of Management Consultancy Services at Deloitte Touche Tohmatsu.

Nasscom estimates that currently more than 22 lakh people are working in the Indian IT-BPO sector, while indirect job creation may be about eight million.

However, some experts believe that Indian IT is not yet in a dire strait. C.S. Venkata Ratnam, Director, International Management Institute (IMI) thinks that the sector is better off but it may see 4-5 percent job losses in the first two quarters of this fiscal. Moreover, a study by the global consultancy firm Mckinsey and the IT industry body Nasscom says that India’s technology and services industry will continue to expand and could face an employee shortage of up to 3.5 million by 2020.

The study titled ‘Perspective 2020’ further says that the sector will earn $225 billion in revenues by that time despite the current global economic crisis. Of this, $175 billion is expected from exports and the remaining from domestic sources.

“This is absolutely feasible. The medium to long term future of the industry remains secure even in the face of recent macro economic trends,” predicts Noshir Kaka, Director at McKinsey.

“The untapped markets from Brazil, Russia, India, and China (BRIC) and the Gulf Cooperation Council (GCC) regions will contribute 80 percent to the incremental growth during the period till 2020,” Nasscom President Som Mittal says. North America and Western Europe currently constitute the core markets for the Indian IT and services industry, contributing about 75 percent to the total revenue.

“Newer verticals like healthcare, public sector, and media will present opportunities to diversify and tap growth,” Ranjit Tinaikar, Partner at McKinsey, says. Currently, the banking and financial services and insurance (BFSI) sectors account for a major chunk of the revenues.
However, the report warns that India’s share in services exports could decline from 51 percent to 40 percent. Besides, our infrastructure is still ill-equipped to handle an industry five times the current size. The study also expects competitive threat to India from as many as 25-30 countries.

Currently, if Nasscom estimates are anything to go by, IT services (including engineering services, R&D, and software products) exports, BPO exports, and the domestic IT industry provide direct employment to 9,47,000, 7,90,000 and 5,00,000 people, respectively. The next 5-6 months would be critical for companies in deciding on job cuts. In the recent months, IT biggies like TCS, Infosys, and Wipro have had job cuts and freezing of salary hikes.
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