It’s a Tech Rationalization not a Tech Winter
The headwinds from the ostensibly global “tech winter” have been relatively hushed in India so far, despite India’s IT sector witnessing a significant decline in hiring, with some of its more celebrated start-ups, especially those in the edtech sector, even laying off employees and contractual workers en masse as they try to minimise costs and conserve money. However, there is reason to believe that these layoffs and decline in hiring, are just the result of tech industry’s job market returning to normal after the pandemic's spike in demand for digital goods worldwide. Demand still remains for certain core and evolving roles within the tech industry, albeit at lower salaries. IT professionals, and even start-ups building in a bear market, would be well served by knowing what these roles are, and what qualifications, certifications and skills are required for the same.
Meta formerly Facebook announced that it had laid off 11,000 workers, or 13% of its staff, and that, with a few exceptions, it will stop employing until Q1 2023. Elon Musk sacked key executives and cut 3,700 employees shortly after Twitter’s $ 44 billion acquisition agreement was finalised. Microsoft has let go of some additional workers. As per recent announcements, it seems that Amazon may be planning to layoff as many as 20,000 employees, and Google might soon layoff up to 10,000 employees, owing to the growing pressure on the companies to downsize. In India, edtech start-ups, such as Byju’s, Unacademy, and Vedantu have all witnessed significant layoffs, with 2,500 people, 600-1000 people, and around 600 people, being laid off respectively. In the e-commerce sector, players such as Ola have laid off more than 2,000 staff members, in response to the failure of its quick delivery business launch.
However, in comparison to the high-profile dismissals in the United States, the lay-offs in India reflect a lesser proportion of the total number of employees let go. It can also be argued that India's tech enterprises have proven to be more resilient to market headwinds than their Silicon Valley counterparts. In the same period, Infosys, which employs 345,000 people, reported a net profit of Rs 5,809 crore.
India’s techies enjoyed a period of high salaries and a surge in employment during the pandemic, due to a skyrocketing global demand for digital products. Many labour markets do not adjust quickly to shifts in their underlying supply and demand curves. There is some supporting theory, namely the cobweb model in labour market economics, which demonstrates that, in fact, markets for highly skilled workers can exhibit systematic periods of booms followed by busts as the market slowly drifts toward its long-run equilibrium wage and employment. The decline in hiring and instances of layoffs could simply be the result of the labour market for technology in India returning to normal after a boom, enroute an apparent bust, and mediated by a reversal of over-hiring during the pandemic.
Talent became expensive with the easy availability of capital in 2021, a trend that shows clear signs of slowing down. According to Tracxn Technologies, a market intelligence provider for private company data, Indian start-ups raised $41.3 billion in 2021 as compared $25.5 billion so far in 2022. This rationalization or departure from aggressive investment strategies was long overdue, and will understandably be reflected in the labour market. That being said, this does not necessitate an overtly gloomy position, as the longer-term outlook still remains judiciously positive. Once global economic conditions improve, India is likely to re-emerge as a top destination for venture capital funds.
What does this increased access to a pool of tech talent at reduced pricing mean for Indian enterprises and start-ups, particularly traditional firms seeking to renovate their business processes?
This could be seen as an opportunity to recruit talent in a less competitive market. But where exactly do these opportunities lie? It could be argued that shortening systems development lifecycles alongside delivery of new products and platforms through improved DevOps, the gathering and application of AI-driven insights to improve customer experience and sales productivity, better database management and automation, more cloud integration, cybersecurity and privacy, are just some of the new roles that companies, and hence IT professionals, can choose to focus on.
From the point of view of tech professionals, how do they know which new skills to focus on? There is an increasing need being expressed in the industry to stay proactive, and spend time acquiring know-how in specific tools and technologies that the market is demanding. But then again, do they spend their time learning to build and maintain tech stacks and databases through SQL and automation? Do they focus on data storage and processing tools such as Hadoop or skills related to Platform as a Service (PaaS)? Or is upskilling for roles in Data Science, Data Engineering, or Machine Learning Engineering more aligned with their current capabilities?
For both companies and tech professionals, a skills gap user interface which demonstrates the current and potential demand of talent across sectors is the need of the hour. Unlike traditional skill gaps studies where the outcome is the backward-looking supply-demand mismatch, this will have to be a forward-looking and continuously updated platform which will use technology to understand not only the mismatch between supply and demand of skills but also the pockets of inefficiencies where the shortfall is not being catered to by the training or the e-learning universe. For tech professionals, especially, now would be a good time to come to terms with the new reality that salaries will not be at levels they were once used to seeing, and that if they are in a secure job, they should stick to it for the moment.