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Sansad TV: Perspective- Layoffs of IT Professionals

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Introduction:

In just the past month there have been nearly 50,000 job cuts across the technology sector. A string of companies, including global tech giants have been slashing jobs one after the other. Google, owned by parent company Alphabet, has announced it’s going to lay off 12,000 people. Microsoft is cutting about 10,000 jobs, which is almost 5% of its workforce. Amazon plans to lay off more than 18,000 employees, primarily in its human resources and stores divisions. Meta, the parent company of Facebook laid off 11,000 people, about 13 per cent of its workforce. Twitter has let go about 7,500 of its employees since the social media platform was acquired by Elon Musk. As a result of the massive lay offs, thousands of Indian IT professionals in the U.S. are without jobs…now struggling to find new employment within the stipulated period under their work visas following the termination of their employment to stay in the country. As per news reports, nearly 2 lakh IT workers have been laid off since November last year, including some record numbers in companies like Google, Microsoft, Facebook and Amazon.

Impact on Indian professionals:

  • The Indian IT services firms are among the largest employers in the organised sector and any global economic trend is bound to have an impact on their growth projections.
  • Managements look at headcount numbers critically when they want to cut costs and protect profit margins as they are accountable to investors.
  • There are a few signs which may signal what is to be expected in the next few months.As per some industry insiders, between 30% to 40% of those laid off are Indian IT professionals, a significant number of whom are on H-1B and L1 visas.
  • The H-1B visa is a non-immigrant visa that allows U.S. companies to employ foreign workers in special occupations that require theoretical or technical expertise.
  • Technology companies depend on it to hire tens of thousands of employees each year from countries like India and China. A sizeable number of them are now scrambling for options to stay in the U.S. to find a new job in the stipulated few months that they get under these foreign work visas after losing their jobs.

Layoffs becoming common:

  • A potential economic recession is a big red flag. With inflation soaring in most parts of the world, central banks have been scrambling to rein it in by increasing rates so as to make it more costly to borrow and consume. This will eventually affect economic growth and jobs.
  • The International Monetary Fund (IMF) has cited forecasts for global GDP growth in both 2022 and 2023 as gloomy, given the pandemic and ongoing Russia-Ukraine war.
  • Setting aside the 2008 financial crisis numbers, estimates for this calendar and the next by the IMF are the weakest since 2001.

Impact of layoffs the tech industry:

  • Growth has indeed slowed down from pandemic levels.
  • Analysts also project that the five big tech companies, including Apple, are headed to report dismal profits.
  • These big tech companies, however, still remain huge and profitable nonetheless. Microsoft still reported a more profit in the quarter ending in December 2022, compared to a profit of about $11.6 billion in the same period in 2019.

Ethical issues involved:

  • Balancing the interests of the two important stakeholders – investors and employees:
    • Because financial losses are only temporary, investors must be convinced of long-term rewards. Instead of layoffs, employees should be encouraged to upgrade themselves and work overtime to help the company get through difficult times.
    • In this way, both of their interests can be balanced.
  • Utilitarianism: From the utilitarian point, mass layoff’s impact on the well-being of the people as a whole must be considered. While lower profits (maybe short-term losses) will hurt shareholders/investors, the cost of job loss will be suffered by employees and their families.
  • Corporate governance and business ethics: It demands that employees must be given a notice period before asking to leave the company.
  • Responsibility: It is the legal obligation of a company or employer to act in the best interest of its employees.
  • Empathy: Elon Musk once stated in an interview that he experienced financial difficulties when unemployed. Thus, he should think from the standpoint of his employees.