At a recently held networking event in Bengaluru, an Inc42 team met several mid-rung executives working at global tech giants such as Google and Amazon. During our conversation with these executives, we realised how concerned they were about losing their jobs, for which they have been upping the ante by sharpening their skills for many years.
As we opened up with these executives to understand their fears, an angel investor joined the conversation, saying: “Welcome to the startup world!”
Well, it appeared that the gentleman was taking a potshot at the big tech giants for going down the startup way of doing things — the route that often meets but one destiny whenever any crisis occurs — layoffs.
Although everyone at the event welcomed the comment with a smile, their unanimous nod was enough to confirm the fact that the big tech has started doing what many Indian startups are infamous for — first hire with obnoxiously high pay packages and then resort to layoff under the veil of cost-cutting measures.
As we spoke with more executives working at MAANG (Meta, Amazon, Apple, Netflix, and Google) companies, we were able to get a better understanding of what’s really happening at these US-based tech companies.
We learnt that after dishing out fancy packages during the pandemic to hire employees, the tech giants have put them on performance improvement plans (PIPs), made project deadlines stricter, rolled back several tasks, and cut down on yearly appraisals.
As per several media reports, global tech layoffs, which started late last year have so far impacted nearly 2 Lakh employees across the globe.
Even though many CEOs of these tech giants humbly apologised in their emails before issuing pink slips, almost everyone we spoke with for this story confirmed that the work culture of these tech behemoths has become nerve-racking, with managers constantly hovering over their heads and sounding alarms to deliver or depart.
“The fact of the matter is India is no longer considered as a cost-effective destination for US-based tech firms that today are paying their Indian workforce on par with what they pay to their employees in the US,” said Pareekh Jain, a Bengaluru-based senior tech consultant.
This, in turn, has created a ripple effect of layoffs, and the Indian workforce is in the line of fire, too.
Though, what is interesting to note here is that several executives Inc42 spoke with, said the companies were bluffing on the number of employees laid off, as the impacted number of employees could be much more than they claim to have fired.
According to the data compiled by Inc42, which we collated from various HR tech platforms, layoffs in India account for nearly 10-15%, or 25,000 job losses, of the total pink slips shown (about 2 Lakh) across the world by these tech giants since last year.
While we cannot decipher the exact number of people that will be impacted by the ongoing churn at these tech companies, experts foresee multiple waves of job cuts by big techs in India in the next 18 months.
Who Will Be At The Receiving End?
Seemingly, according to experts, US-based tech giants are expected to keep on firing people at least in 2023, even though we are already past the first major layoff wave.
“Our estimates suggest that the number of people who will now lose their jobs, especially in India, will be lesser compared to last year. The huge talent pool and the cost arbitrage may act as cushions for India, which will make the US-based companies move their projects to India from the US and Europe and, hence, people will be required. Meanwhile, many advanced technology projects by Google, Meta, Amazon and Microsoft, which included blockchain and Artificial Intelligence, have been revoked, leading to job losses,” Sunil Chemmankotil, CEO, TeamLease Digital said.
He added that these companies will still go on reassessing some of the projects that they invested in during the pandemic, and, hence, the demand for several roles, especially in marketing, sales and customer servicing, may get impacted.
Meanwhile, the CEO of Greyhound Research, Sanchit Vir Gogia, noted that the first wave of workforce rationalisation is over; however, small rounds of firings by these big techs may be pointed towards those products that have failed to achieve business outcomes.
Gogia added that although it is likely that every part of the business function will be impacted, the roles that will be under scanner include sales, pre-sales, marketing and entry-stage developers.
Further, the MD and CEO of CIEL HL Services, Aditya Narayan Mishra said, “The employees were let go mainly based on how the projects were performing and whether they were adding value to the company, rather than individual performance.”
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According to a TeamLease analysis, the year (2023) could see a major drop in hiring activity within the tech industry, with a nearly 60-70% decline in fresher and lateral hiring.
This, in turn, will create a challenge for the uptake of fresh engineering graduates who might have to wait for a year to fetch a job in their dream companies.
Employees: The Scapegoat?
In the last leg of 2022, the CEOs of Amazon, Google and Meta wrote emails to their employees, apologising for taking tough calls and letting many people go due to reasons such as businesses undergoing recalibration, volatile capital markets and uncertain geopolitical and macroeconomic situations, among others.
Interestingly, an analysis of the quarterly results of the tech giants revealed that some of their major investments (to the tune of billions of dollars) in advanced technologies like Metaverse, Blockchain, and Open AI backfired and their stocks started losing value.
In a bid to control the damage impacting shareholders’ sentiment, these companies resorted to cost-cutting measures at the expense of their employees.
The investments in these advanced technologies further swelled due to the aggressive hiring of technologists, marketing and sales personnel, and HR executives.
Experts argue that the companies then realised that the adoption of such technologies could take longer time than expected, and, hence, decided to cut back on spending more on these roles, amid slackening post-COVID demand.
Highlighting a few other factors, Gogia of Greyhound Research said the destabilisation of the US economy and the emergence of the banking crisis in the region impacted infrastructure and utility business and the automation taking place in these industries.
“These changes were rapid and started impacting big tech companies. The gradual shift in the power from the US to other countries, including China, Russia and India, has also hit the businesses of tech firms headquartered there,” Gogia said.
“Basically, COVID accelerated the adoption of many tech projects, which would have normally taken another 4-5 years to be accepted. Take the case of the cloud, this has been in existence for several years before COVID. But the pandemic resulted in quicker adoption of the cloud, which, in turn, created a demand for talent. However, since 2022, although cloud deals are still happening, tech giants and small companies have been reassessing their cloud spending,” Pareekh Jain said.
Big Tech Layoffs: Who’s In The Line Of Fire, Anyway?
Unfortunately, there is no way to predict the specific roles that will be axed in the upcoming quarters. A lot, though, will depend on the ability of business verticals to generate revenue for companies, thereby securing jobs in these business functions.
Meanwhile, analysts are positive about a lot of work moving to India as more organisations in the US go remote, realising the cost efficacy of such models.
“That is a unique opportunity the Indian talent could look for. There is a gap in demand and supply in cyber security and AI verticals. I can confirm that there are 45,000 such jobs available in the market right now. However, the supply side is a challenge,” Sunil said.
Despite the current trend of saving costs by churning the meat in organisations, the CEO of CIEL HL Services sees a silver lining for Indian employees. As these companies seek to maintain their projects and operations, they will require resources to do so.
“Given that India has a large population of young graduates in engineering and other relevant fields, global tech companies may choose to transition some projects and jobs to India where the cost of employees is comparatively lower. This could potentially provide new job opportunities for Indian workers in the coming quarters of 2023,” he added.
While experts see hiring sentiments improving in the near future, employees Inc42 spoke with are jittery about their current job roles, future employment prospects and the skills they need to tap future opportunities.
Meanwhile, amid uncertainties, they suspect a correction in salaries and promotion delays — although none of them believes that their performance has anything to do with the current wave of layoffs.
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