Layoffs scare is real, not exaggerated, finds ET's Jobs Disruption survey

Job creation has been the biggest economic problem for Prime Minister Narendra Modi who had promised to create one crore jobs before coming to power. As if lagging private investment wasn't enough, demonetisation only added to that problem. Now, widespread layoffs in the private sector have set off a scare among workers.

Before Larsen & Toubro, India’s biggest engineering firm, fired 14,000 employees, or 11.2% of its total workforce, in November last year, mostly startups made headlines for layoffs. Demonetisation brought layoffs to manufacturing and construction too. This year there was a spate of layoffs in the information technology (IT) sector as Cognizant, Wipro, Infosys and Tech Mahindra pruned their working force.

Yet, many in the government and private sector deny that job losses are a trend. Law and IT Minister Ravi Shankar Prasad told ET that the current situation had been exaggerated. "Some performance-related routine trimming is an integral part of any industry and should not be exaggerated," he said.

Similarly, Nasscom played down the layoffs in the IT sector, terming them workforce realignment linked to performance appraisal processes, a regular feature every year. It claimed the industry continued to be a net hirer with over 1.5 lakh people being employed on net basis every year.

If you ask the employees, the crisis in the jobs sector is palpable. The Jobs Disruption Survey by ET Online did--and the answers are worrying. A large number of them see layoffs coming and their job prospects shrinking.

The stark takeaway from the survey of nearly 11,000 employees is that the fear of job losses is not overblown but a near-term reality for employees.

The survey confirms several experts and studies predicting big layoffs in near future as nearly 50 per cent of the respondents said there was a talk of layoffs coming in their company. There is little hope that things would improve. 62 per cent respondents think their job prospects would keep on shrinking.

Besides macroeconomic reasons such as slow private investment and disruptive policy such as demonetisation, a big threat to jobs is emerging technology. New technology is transforming the nature of business across sectors but its impact on jobs is seen more in the IT sector. Increasing automation and cloud computing have hit revenues of the IT companies. Now there is less business in maintenance and software services, the traditional domain of Indian IT companies. This is a major reason for companies reducing their campus hiring in India and laying off staff.

But employees across sectors see emerging technology impacting their jobs. 65 per cent respondents saw new technologies replacing workers in their company in future. However, 44 per cent did not see their jobs vanishing altogether due to emerging technology. Yet, a considerable number—38 per cent—thought their jobs would be made redundant by new technology.

What is more serious than employees being scared of layoffs is the feeling that things may not change for good in the long term. 62 per cent of the respondents said their job prospects would keep on shrinking. With such a large number of employees not hopeful about their future, it seems they don't see any redeeming factor such as new jobs being created or more avenues opening for them.

The ET Jobs Disruption Survey reveals that the only way to face a future with shrunk job prospects or many jobs vanishing altogether could be acquiring new skills. A very large number—81 per cent—of respondents said they needed to reskill/retrain for better job prospects. This shows technological disruption is anticipated across sectors and not just information technology, though today the tech workers face this challenge more than those in other sectors.

While employees cannot control larger factors such as the visa policies of the US government or demonetisation, they can surely beat the factors that are solely related to their own capabilities such as worker redundancy due to automation in sectors like IT, startups and e-commerce. E-learning companies such as Upgrad, Skillsoft and Simplilearn have seen a surge in the demand for their courses in specialised areas like analytics and product management.

Indeed, in response to the question — How will you react to new technologies replacing workers in your company? — 81 per cent said they would learn new technology. Nine per cent said they would join another company and 11 per cent said they would ask for another profile.

However, employees don't regard new digital technologies to be as big a threat to their jobs as the stress specific to their sector. A majority of respondents — 52 per cent — considered stress in their sector as a threat to their jobs instead of new digital technologies. This reflects worries over the factors that have immediate impact such as the US visa restrictions in case of the information technology sector and demonetisation in case of construction and real estate.

While digital technologies will impact the jobs slowly, the factors that stress a specific sector will take an immediate toll. For example, in the startup sector, drying up of funding will have a faster impact on jobs than new digital technologies. Only 35% respondents considered new digital technologies as the main threat to their jobs.