Cognizant to cut 7,000 mid-senior level jobs, exit content moderation
Infosys lays off up to 10,000 employees in mid, senior level
Capgemini cuts workforce by 500

Some of the news coming out of top Indian information technology (IT) companies over the past few months has made for grim reading. But perhaps not all, it would seem.

TCS, Infosys, HCL Tech and others hired over 64,000 in six months to September
Cognizant to hire over 23,000 students in 2020

The headlines, though contradictory, are not very dissimilar to previous years. In fact, the major Indian IT companies—Tata Consultancy Services (TCS), Infosys Ltd, HCL Technologies Ltd, Wipro and Tech Mahindra—undertake this workforce reorganisation every year. As do companies like US-listed Accenture Plc and Cognizant Technology Solutions as well as French IT company Capgemini—all of whom have between 33% and 70% of their workforce in India.

But this year has been a bit different.

The employees being laid off were mostly mid-to-senior level. Say, an architect, a tech lead, or those holding managerial positions such as project manager or delivery manager. Those being hired are fresh out of engineering school.

It’s almost a tectonic shift in an industry that employs about 4 million people. It also accounts for $136 billion of India’s total exports, according to industry lobby group National Association of Software and Services Companies (Nasscom). Plus, IT makes for about 8% of India’s GDP.

“The companies argue that they’re trying to reduce employee cost and flatten the organisation structure—“pyramid actions”, as Cognizant Chief Executive Brian Humphries calls it. But there’s bound to be a ripple effect.

The IT industry has had a strong run since the turn of the millennium, the stumble during the 2008–09 financial crisis notwithstanding. US- and Europe-based companies outsourced support jobs such as back-end operations and customer support operations to these companies. IT firms could bill a client based on how many employees were working on the contract, and so they hired engineering graduates by the droves. As contracts poured in thick and fast, quick promotions were still seen as the perfect carrot to keep employees happy.

“When companies are growing at 30–40%, you don’t have time to breathe. You don’t want people to leave, so you promote them every two or three years. You take the easy way out,” explains V Balakrishnan, former chief financial officer at Infosys.

On the back of this sterling growth, TCS rose to become the largest private-sector employer in India, with nearly 425,000 employees. Infosys, the poster-child of the IT boom, has more than 228,000 employees, while Wipro has nearly 176,000. Cognizant’s headcount is about 290,000.

However, the nature of work at these companies changed with newer technologies.