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Explained: Why tech giants in India are sacking employees

Print edition : Nov 24, 2022 T+T-

Explained: Why tech giants in India are sacking employees

In the past few months, thousands of young Indians have been fired by major technology companies.

In the past few months, thousands of young Indians have been fired by major technology companies. | Photo Credit: Kabir Jhangiani/Pacific Press/picture alliance

Thousands are now staring at an uncertain future. Experts say this could be just the beginning.

Neha Sethia, a senior employee at a global tech firm in India’s financial hub, Mumbai, saw the writing on the wall a month ago after several of her friends were given a notice by an educational tech firm to initiate downsizing in the midst of a funding crunch.

“I knew that e-commerce exploded during the COVID pandemic and attracted investors’ attention. The moment the pandemic ended amid market volatility, tech companies began facing a crisis but I didn’t know that my turn would come so soon,” Sethia, who was then sacked by her own company, told DW.

Pragya Kapur, a mid-level employee in New Delhi, says that her company’s bosses told her that they were downsizing due to the global economic crisis. “I was told that I was no longer needed. None of this was related to my performance. They gave me a severance package, and almost immediately, I was no longer part of the company,” Kapur told DW.

They are just two of the thousands of young Indians who have been fired by major technology companies in the past few months. Characteristically seen as big spenders, these companies are now resorting to massive cost-cutting.

Big names cut workers

Educational tech companies such as unicorn Byju’s, Unacademy, and others have also sacked many employees. Byju’s, one of India’s most valued start-ups, has laid off some 2,500 employees this year. Massive layoffs have been reported in at least 44 start-ups in India, according to industry insiders. International brands such as Apple, Meta, and Amazon are also cutting jobs or have frozen the hiring of new employees.

“When hiring in the global tech industry began to taper off in August, it was pretty much clear that the storm would hit India. And sure enough, soaring inflation in the US has made brands reluctant to spend money on advertising, which has resulted in layoffs,” a senior official with a jobs portal told DW on condition of anonymity.

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Reports suggest that Twitter has laid off about 50 per cent of its workforce after Elon Musk took charge of the social media company. This was followed by tech giant Meta Platforms Inc. announcing plans to lay off about 11,000 employees, which also impacted its Indian staff.

Other companies, such as Microsoft, Salesforce, and Oracle, have also reportedly laid off employees amid worsening global economic turmoil, which has been exacerbated by the Ukraine war and post-COVID woes.

Global economic woes

The recent sackings are the biggest-ever layoffs in the history of these companies. They have sparked a debate on the duration of this dark period for tech giants that see India as a key growth engine. There is concern about a tech meltdown and the viability of unicorn business models. As a result, the valuations of many start-ups are under stress and many companies have announced retrenchments while reorganizing their businesses.

“There was an excessive ramp-up in these big tech companies during the pandemic that went through an aggressive phase of hiring. Obviously, it did not play out as expected,” Shrijay Sheth, co-founder of LegalWiz.in, which provides legal and compliance services to tech start-ups in India, told DW.

Sheth pointed out that firms are now faced with a rise in interest rates, which has increased outlay on the money they borrowed for expansions. “The global economic slowdown has forced companies worldwide to struggle to adjust to the fast-changing landscape. India is facing its impact. It will take an economic quarter or two for things to settle down,” Sheth added.

What about labour rights?

While some retrenched employees have been given medical coverage to help them navigate through these tough times, or minor benefits such as career support and paid time off (PTO), many people are looking for other ways to survive.

A majority of IT sector professionals are uncomfortable joining trade unions because they fear retaliation from the management. If they do join, they are often forced to resign and this might be accompanied by threats to future job prospects. In such a scenario, employees may find themselves isolated and frightened and, eventually, give in to their company’s demands.

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Officials at the National Association of Software and Service Companies (NASSCOM), which is the apex trade association of the IT industry in India, declined to comment on this matter when contacted.

“With Indians getting laid off by big tech companies, they are currently being left without remedy because most of their jobs are based on contractual obligations, which gives the right to the companies to terminate their employees,” Pavan Duggal, a cybersecurity law expert, told DW. “It does not present a very promising picture from the perspective of thousands of Indians laid off from a legal stand point,” Duggal added.