The Bangalore-based software developer usually started his day with meetings, most days from his home as the world shifted to a hybrid work model after the pandemic. Things were going well and he felt as if he too was progressing in his career. However, his world was turned upside down when, out of the blue, he was told he would be fired, but not in so many words.
The recent B-Tech graduate knew this was an exciting time in his career. His first job. But within months of getting the job, he was told he had been “affected by a reorganization process within the company.” “When you get a place, the responsibility of your family, their expectations, their dependence on you increases,” said the technician as he talked about how getting a job was a big deal in his family until it collapsed.
He said there were rumors of layoffs, but no one knew for sure what was actually happening. This was confirmed to him the day he received a call from top management that he had to resign on the same day. “They told me that you were affected by the recent restructuring of the company’s organization and told me to resign on the same day.” If you’re going to fire people, why are you hiring them on a trip in the first place? Why do you want to hire so many people when you are laying off your current employees.”
“I have responsibilities at home.” Suddenly you don’t have a job anymore. It’s not that I can’t get a job, I have options, but you can tell me in advance if you’re firing me.”
This is the story of thousands of others in the technology space. People lose their jobs overnight. They are fighting. But it was not easy.
It’s been a turbulent year for tech companies around the world. It seems to be the cumulative effect of various factors – 2 years of pandemic, Russian-Ukrainian war, market manipulation by some redditors and rising interest rates to name a few. From mid-2022, people around the world are losing their jobs.
From the ‘big resignation’ phase to mass layoffs, it’s been a tumultuous year. What will the technology space look like in the future? Is there light at the end of this tunnel?
Is there any hope?
According to Hareesh Tibrewala, Joint Managing Director, Mirum Capital, “Immediately post-Covid, we saw an increase in demand for IT services, resulting in a huge demand for human resources. There was also a Great Resignation and all businesses over-planned for new expected opportunities. Now we are seeing some kind of correction. The war in Ukraine has definitely forced businesses to slow down their IT investments, and therefore all the over-hiring is canceled out by these layoffs. Also, venture capital, which goes through cyclical ups and downs, is now on a downward curve and the focus is more on profitability, not just top-line growth.”
Some other industry experts also told e4m that the layoffs are a reflection of pressures on the economy.
As for Viren Razdan, CEO, Brand-nomics, tech companies have moved quickly to digital adoption only to face the harsh reality of people reverting to old habits. “The dismantling of the model resulted in widespread rationalization and redundancies as a result.”
Tibrevala, however, sees the light at the end of the tunnel. “IT businesses and services are here to stay and grow.” What I see is more of a correction. What goes up very quickly also comes down very quickly. And for me, this should be an opportunity for Indian IT companies.
Echoing that sentiment, a senior industry player said: “The trend will reverse once the war ends and the economy reopens. But things look tough for the next 6 to 8 months.”
“Most tech companies have done phenomenally well during Covid. So they’ve hired more than they need. Now they’re under pressure to show revenue and growth,” he added.
Talking about the factors that led tech giants to issue pink slips, Razdan said, “The Covid phase has broken companies across categories and rationalization and execution have become the new mantras. Companies with inflated valuations are suddenly being questioned about the permanent losses that are being piled up in the hope of a mirage-like value. Some of the high-profile IPOs with incredible valuations have folded with investors impatient for a distant mirage or pot of gold at the end of the rainbow.”
Speaking further on the uncertainties, Razdan said: “The changing dynamics in this emerging economy keep the bullish optimism, but the wake-up call is real. While many look down on Elon Musk’s obsession with delivering monetization, investors will soon be secretly (or not-so-secretly) singing the same song. We’ve lived in an overabundance of ideas with fantastic valuation models, but stairs require more than just a fancy presentation, skilfully supported. The new game plan has to have reality and a plan to build capabilities, burning money is not cool anymore.”
Sharing insights into the economic situation and what lies ahead was another industry player, “2022. were dominated by the economic challenges presented by the war in Ukraine and China’s zero-Covid policy. The pain from both should ease in 2023. Oil prices have started to cool and alternative fuel sources are being identified. China has also relaxed its zero covid policy. I see economic conditions improving by mid-2024.