Herd Mentality in IT Sector

Off late I have been discussing with several persons including my clients and competitors about how the job market is behaving for IT professionals. Frankly speaking, I am getting mixed signals. I must admit there is a lot of optimism in the market and everyone I spoke to said that things will improve soon, but their hope is not backed with any data. No one is seeing it clearly, there is uncertainty and an underlying tension. Everyone is saying that things might look up from April 2023. Ideally Q1 is supposed to be one of the most active quarters in IT hiring segment, but this year it has been unconventional.

From March-April 2022, there have been constant talks of recession hitting the US, European markets, the Russia-Ukraine conflict and with China facing challenges due to the onset of Covid19 once again though it proved to be more endemic , there has been an underlying cautious approach in the market. India on the ground doesn't seem to be showing any signs of recession. The Budget also hasn't brought out any major challenges rather taxation rates have gone down making it easier on the pocket.

The trend seen is that IT Companies are hiring in low numbers, but silently, not making much noise about it in the public domain. Hiring has been for niche skill segment , new age technologies and for specific domain experts. Some reports suggest that companies have withdrawn their offer letters issued to STEM campus graduates others suggest that STEM hiring is bound to grow in the next three four months. While markets are taking about massive layoffs right from US market to Indian markets, some companies are lifting up their freeze on hiring in India . Most of the recruitment companies are facing severe talent crunch and many candidates are missing from the grid or gone silent and passive. This is pretty unconventional. With layoffs in US and other parts of the world, business will come to low cost centres such as India. Tier2 cities in India are beaming with infrastructure, digital power and confidence like never before.

After the sudden drop of over $100 Billion in market capitalization due to the the wrong answer by AI Chatbot Bard, Google surely will look ahead to cut down cost and more layoffs may happen even though they have already cut down 6% of their team. Tech Giant Microsoft hasn't been behind cutting down 5% of its team. Twitter has cut down 99% of its staff in India. Meta has laid off 10000 people at one go and many others are already in the news for their layoffs. News reports suggest that more than 120000 people in India have lost their jobs in past year. Startups haven't delivered returns to investors as promised, indulged in financial misreportings hence, due diligence has increased from the investors side and free flow of funds have been a challenge. Many roles have become redundant now because the pandemic is over and people are back to routine life .For eg: During pandemic e-healthcare , e-education and e-shopping was a huge business and had potential. But now when things are more routine, the growth trajectory has taken a hit. Many businesses needed to migrate urgently to cloud and that needed technical hands, but such businesses have now stabilized more or less.

Point to be discussed here are:

1) Are all the IT Companies having herd mentality ? It has been a trend that most companies follow what Tech Giants do...Like when they announce work from home, everyone suddenly starts believing work from home is a good option. When they build large campuses and spend extravagantly, others follow suit. When the tech giants speak of austerity, the Indian IT Companies follow. When it comes to hiring trends, is it because the tech giants are cutting down , all others have become cautious even though actually they may not have a challenge in India.

2) Is Indian IT market only depending on world economy or we are on the way to self sufficiency? India is now the fifth largest economy in the world. Our own manufacturing sector is expanding, our own brands are making a mark, automobile sector is booming, we are producing EVs , we are having EdTech products, E-healthcare is growing, banking sector is booming , so do we have enough business internally or we are still dependent on US, Europe, Canada and Middle-east.

3) Can India become a global lateral hiring market? With Indians having quality higher education, English speaking skills, expertise in other foreign languages, trained workforce, it is possible to reskill Indian talent to cater to global lateral market in a bigger way. If yes, how is it possible.

The Indian IT and BPM segment has now grown to around 8% of the GDP. It is around $227 billion industry, which added 4.5 lakh new jobs to take the overall direct employees to 50 lakh people and may be another crore people indirectly , affecting a population of around 7-8 crores at least. Over 44 per cent of the new hires were women and their overall share is now 18 lakh.

My take is this sector needs to be made stronger as tech industry is highly people oriented. Indian IT Sector needs to move out of herd mentality and explore the waters on their own . "Atmanirbhar IT Industry" should be the goal for the highly capable Indian IT Sector. They need to explore more opportunities within India , Build products in India for Indian market, Develop Solutions for better living conditions in India, so that this sector continues to generate more job options for the Indian educated talent. Recently my son was giving an Interview and was asked how can technology help bring out change. His answer touched my heart. He said Technology can bring massive change in India in our living conditions, in our thinking pattern and make India Vishwa Guru. Indian IT Industry should embrace this thought, come out of over dependence on US market and be job creators.