Companies
Risk profiles: Startups, tech cos face 20k job cuts in 6 months
Summary
Tech and startup companies continue to lay off employees citing over-hiring, cost pressures and funding challenges. Over the next six months, about 20,000 job cuts are expected, with certain profiles more at risk. Mint explains:Tech and startup companies continue to lay off employees citing over-hiring, cost pressures and funding challenges. Over the next six months, about 20,000 job cuts are expected, with certain profiles more at risk. Mint explains:
Which sectors are most impacted?
While the pandemic raged, edtech companies hired a number of online teachers. When schools reopened, they focussed on recruiting offline educators. But funding shortages pushed them to sack many of them. According to Kamal Karanth, co-founder of Xpheno, a staffing company, the impact of a looming recession in developed markets, governance mis-steps and tighter funding has affected fintech, edutech, agritech, logitech and direct-to-consumer companies the most. Firms are sacking staff from sales, DevOps, support staff and admin. People whose jobs are secure can expect a cut in bonus and variable pay.
Who is at risk in the IT sector?
In IT services companies, high wage costs have impacted balance sheets. While client-facing roles are relatively safe, those on the bench, engineers and support teams are more at risk. Companies have shrunk their net additions but India’s top IT firms such as Tata Consultancy Services Ltd, Infosys Ltd, Wipro Ltd and HCL Tech, continue to struggle with high employee costs despite a decline in overall headcount. Although IT firms have said they will honour all campus hires, new recruits will face stringent screening tests that will wean out larger than usual numbers.
Where could the sacked employees find jobs?
While global internet giants and Indian IT firms cut staff, jobs are available in various captive centres in India. The demand for skillsets in AI and machine learning is high. Startups continue to absorb younger staff in marketing and sales. Banking and insurance companies are facing high attrition—they are hiring for operations, asset management and marketing roles.
Which profiles are isolated from layoffs?
Those in legal and strategy roles have been untouched so far. Middle management staff, particularly those with strong digital skillsets, are shielded. Client-facing teams are protected as well, since companies do not want to disturb team dynamics. Among junior workers in IT services, employees on running projects are better placed than those on the bench—companies have already started billing their clients in running projects. In edtech and logitech, finance and supply chain roles are safe for now.
How long will the hiring winter last?
Another six months. Companies have paused mandates for middle and senior levels. Many CXOs, who were getting hunted for new businesses, have been told that the ventures are on hold till markets improve. However, staffing firms who hire large scale contract workforce are not seeing much change since the manpower here can be redeployed in different sectors. Companies have told recruiters that they would have a better sense of the demand for manpower by June-July.
