IT Techies Sweat As AI Gloom Hits Job Market — Three Main Culprits At Play

Prasad (name changed) is a mid-senior delivery executive who hails from Visakhapatnam. In December 2024, Prasad was laid off. Since then, he has been "missing".

Prasad's phone has been switched off for months now and he has not even collected his PF amount. Concerned colleagues and friends have been making frantic calls to find his whereabouts — only to discover that Prasad had borrowed a total sum of Rs 10 lakh from various people.

With no job, a family to care for and no way to repay his debt, Prasad appears to have decided to go "missing". One of his creditors, a colleague in the same IT firm, has also lost his job. He is bemoaning the money he loaned Prasad, which is now gone.

Ramesh (name changed) is another such victim of layoffs. For over a year, he has been hunting for jobs desperately, but his age and experience are working against him. The 40-something techie has taken to alcohol — as fights erupted at home over his unemployed status. Ramesh now drinks daily — which he was not prone to do when he had a career.

Losing a job between the ages of 40 and 50 can have a devastating effect, not just on the individual, but on entire families dependent on them. With Tata Consultancy Services Ltd. announcing layoffs of 2% of its workforce, totalling around 12,000 mid- to senior-level employees, techies across companies are in fear.

"There is a lot of anxiety among middle-aged techies," said Arvind Balakrishnan, a business unit head at an IT staffing firm in Bengaluru. "Techies in their 30s usually have at least two young children, most have car loans and home loans."

"Those in their 40s and 50s have to care for their aged parents. They have to get their children married off. The expenses are just too many. It's very difficult to manage," Balakrishnan said. 

So why are these layoffs happening — especially of senior-level managers? Why are they being let go now?

The reasons, according to industry sources, are twofold. The first, lack of upskilling by techies themselves, and the second, poor strategy by managements of IT firms.

The layoffs have been happening for at least a year now, although in bits and pieces, according to multiple techies across companies that NDTV Profit spoke with. TCS has caused a jolt due to the large number of employees. The advent of AI is definitely causing some job losses, but the root of the issue goes far deeper.

"During Covid, IT companies began hiring madly," explained Arvind Balakrishnan who has conducted recruitments for top-tier IT firms at the time. "This is because until Covid hit, our Indian IT firms worked on physical servers."

"Then everyone had to move to cloud. So, anyone who knew open-source technologies like Java script libraries, DevOps and AWS, Microsoft Azure were in great demand. They were getting hired at huge salaries — 4 times and 5 times, whatever they demanded," he said.

Until October 2022, when offices reopened and employees were mandated to get back to work. 

"Now those guys have become non-billable," pointed out Arvind. With policy changes in the US coming into effect in 2023, Indian IT firms were also forced to cut back on their employees in the US.

"Post-Covid fiscal profligacy created a lot of cheap money that chased tech," said a senior Chennai-based industry executive with 30 years of experience in the Big 4, startups and local Indian product companies. "Tech gave discounted sweet deals to enterprises for growth. Enterprises used this to expand tech operations."

"The easy money is running out, so tech contracts are being re-negotiated, and enterprises are cutting costs on the human side. The first to go are the contractors," he explained. His firm has already let a clutch of mid-senior level personnel go.

Another key reason for the layoffs in that age group is a lack of upskilling. In an industry that is witnessing new technology every few months, not being nimble is a sure-shot way to lose one's job.

"When I started my career, I was a manual tester," said Vasupratha Ramanathan, IT specialist, who now works in the UK. She originally hails from Tamil Nadu. "That is not a technical role. But I realised that trends are changing fast and I began to upskill myself — I learnt automation testing, then cybersecurity and later machine learning," she said.

Ramanathan says techies in India pick up managerial roles and rarely update technical skills. "But these are the first roles to be axed when companies decide to do layoffs," she said. "It is up to the individual to make the effort and take time out to upskill themselves as per the latest trends. And the trends in the IT industry are changing very quickly now."

Ramanathan also detailed how tech companies in the UK invest in training their resources. "Companies here encourage their employees to upskill. They help us when we transition to new roles. In between projects, UK tech firms organise skilling and training sessions for their resources. Indian IT firms don't invest in such training or upskilling," she said.

Ramanathan says many Indian families are now encouraging their children to take up an apprentice programme offered by the tech industry. Under this programme, the selected youth would be paid a fresher's salary (around 30,000 pounds per annum on average), their college fees would be paid by the company and they would be trained as they study for their degree.

"This becomes a blessing for everyone since the tuition fees and job are both taken care of," said Ramanathan. "The student has to go to specific colleges chosen by the company but that is a small price to pay when one looks at the benefits."

"It works for the company too as they get to train the talent in their own way. I have told my son that he must not worry if he doesn’t get into the top three colleges of his choice. The apprenticeship programme is always there. Sadly, there is no similar program in India," she said.

Another senior industry executive who works in IT sales agreed with Ramanathan. "You have to keep upskilling yourself vis a vis the market. If you're going to remain a tester, don't even think about buying expensive houses or cars. Don't fall for peer pressure until you're a specialist. It is a fact that the Big 4 don't do any upskilling training," he said. He did not wish to be identified.