Service sector in India is currently fighting recession; thousands of employees are getting fired by the MNCs. However, a recent report has suggested that Indian start-ups have the potential to create lakhs of jobs in the coming 5 years.
As reported by Times of India, major IT giants including Cognizant, Infosys & Capgemini are firing bulk of employees while there is an economic crisis in the nation.
One of the biggest IT companies of India, Infosys Ltd is reportedly planning to lay off thousands of employees at the middle and senior levels. The company has quoted it as mass trimming excusing it as an integral step for smooth running of a high-performance organisation.
“As a high-performance organisation, involuntary attrition is integral to the normal course of business and this should not be interpreted as any mass trimming across any level”, The Times Of India quoted Infosys.
The Large Sacking
“There is no planned layoff. We have performance reviews and people who are not performing are asked to leave. This is normal, there is no targeted layoff,” chief operating officer (COO) UB Pravin Rao said.
The company will be showing doors to around 10% of its JL6 (job level 6) band of employees, which is a senior manager level. The sacking will comprise of around 2200 job cuts at JL6 out of total 30092 employees at JL6, JL7, and JL8 bands.
Further, as reported by The Economic Times, the company also looks forward to cutting off jobs at associate (JL3 and below) and middle (JL4 and 5) levels. This job-cut will account for around 2-5 per cent of the workforce in these levels.
Talking about the senior executive level, comprising of around 971 employees, the company plans to lay off 2.5 per cent of people i.e. around 50 job losses at the executive level. This includes people holding positions like vice-presidents, senior vice-presidents, and executive vice-presidents.
The company further told that the lay-off is not at all planned or targeted; rather, they are laying off employees who are unable to match the expected performance standards. Infosys’s share fell by 1.86 per cent to Rs. 695.80 on the Bombay Stock Exchange (BSE) on November 5.
Other Companies on the run too
Apart from Infosys other companies are also looking forward to cost-cutting activities. Another IT giant Cognizant has exited content operations business recently. The company has a workforce of over 2 lakh employees.
The French multinational corporation Capgemini has a massive workforce in India. It has laid off around 500 employees. On being asked about it, the company blamed the economic slowdown in business for the layoffs.
Future of Service Sector
However, if we talk about the future of the Indian service sector, there is good potential. As per a new report from industry body National Association of Software and Services Companies (Nasscom), Indian startups have the potential of creating around 12.5 lakh direct jobs annually by 2025. Currently, this figure is at 3.9-4.3 lakh direct jobs in 2019.
The report suggests that Indian Startup eco-system has the potential to grow about 4 times by the year 2025. The report titled “India’s Tech Start-up Ecosystem” said, “The number of indirect jobs created by the start-up ecosystem in India can jump to 39-44 lakh by 2025 from 14-16 lakh jobs this year.”
The report has revealed a fresh perception of growth. It says, “India’s talent base is expanding beyond large cities as fresh graduates are choosing to stay back in non-metropolitan cities. These individuals have an almost similar exposure to technologies via the Internet. This enables the founders to recruit quality talent at a relatively lesser cost – allowing better runway and also a base for growth.”
The research conducted by Nasscom suggests that 18% of all the Indian start-ups are working towards deep-tech, fin-tech, enterprise, and retail-tech. These are the most matured sectors with strong metrics across dimensions. These start-ups have the potential to yield job-opportunities shortly as there is a global demand for these businesses and they can’t grow on their own.
The report highlights that there has been increased activity in the field of edutech, retail & retail tech, HR, and health tech technology-based start-ups. Apart from this, there has been notable growth in agritech, aerospace, defence and space sector-based start-ups.
Nasscom has collaborated with global management and strategy consulting firm Zinnov to complete this study and report the statistics.
The study further suggests that deep-tech is becoming more popular across startups after the introduction of Artificial Intelligence and Machine Learning. These concepts are being actively deployed in the enterprise, fin-tech, health tech & Edu-tech. This has resulted in the deep-tech startups fostering at a significant rate of 40 per cent compound annual growth rate since 2014.
The report also tells that total investment in the start-up ecosystem has increased by 16 per cent year-on-year in 2019 – during the January to August period. This means that there is a heavy potential in the start-up business of fostering and creating major job opportunities for the exploding Indian population.