In today’s news, layoffs are common. The reasons are many, but employee performance is always at the forefront. And that’s the definition of layoff too – the act of terminating a worker’s employment, sometimes temporarily, usually due to a lack of work, the employees job are always at risk.
Due to the pandemic, start-ups raised capital during the go-go days. Now these companies are waking up to a different reality, where the next round of capital will be scarce and the business case will be harder.
In order to understand what segments are at risk from job layoffs, Business India spoke with human resource experts. In economic times or shortages of jobs, companies often terminate workers permanently. People are laid off in such situations not necessarily based on their performance, but because their role is no longer relevant. Here’s what we found:
There is the least job risk to core functions
Unfortunately, the first to experience job losses are usually support functions. In contrast, revenue-generating roles are typically insulated from these situations. According to Sanjay Shetty, director of Professional Search & Selection and Strategic Accounts for Randstad India, a HR consulting firm, this has shifted somewhat due to the Covid-19 pandemic as certain industries have been more affected than others by reduced demand or changes in consumer behaviour.
Meanwhile, he adds that current layoffs are mostly happening in cohorts to restructure the workforce in response to changing business objectives.
Reality is changing
“High inflation has significantly reduced margins. We have seen results in India where revenue has been in line with market expectations, but margins have been lower. Mayur Taday, chief business officer of TeamLease Services, an HR firm, says companies evaluate every cost item as they finalize their FY24 plans, and any excess is identified and reduced.
After Covid, companies focused on strategies for post-Covid world, including digitalisation and forecasting demand based on specific themes. Organization structures and costs were constructed based on the demand forecast.
Due to geopolitical factors, disruptions in the supply chain, and unpredictability of consumer behavior, IT companies have been recruiting with the expectation of better days.
According to Taday, the revised business forecast and expected margins have forced companies to adjust their business plans and align their cost structures following Covid. According to experts, one of the following roles is more likely to result in a layoff.
Automated systems like ChatGPT will eliminate jobs that require little variation besides being repetitive, such as coding, data entry, etc., says Rishi Patil, the CEO of Executive 81. It is therefore likely that basic jobs that do not require social or emotional intelligence will become redundant.
During a good phase, companies have expansion plans and recruit people for those purposes. “New initiative jobs are among the few types of specific job roles most vulnerable to layoffs,” Shetty says. Companies are at risk of terminating such jobs during lean times unless they make specific efforts to pivot into new areas.
“All such hirings that were overpaid as a result of the then-prevailing overheated demand situation are being examined,” Taday says. “The demand-supply situation is now tilted in favor of supply.” As a result, those who are being paid significantly above market rates are more likely to lose their jobs.
In a report by recruitment firm Spectrum Talent Management, 50% of Indian companies hired contract employees during mass layoffs in order to reduce their fixed costs.
Due to the seasonal nature of their jobs, contract workers may also feel the heat during downsizing, says Shetty. Since these employment terms are temporary, they may not be renewed.
Continued hiring
While companies have, sometimes, taken a strategic layoff approach, they are also hiring at a decent pace, so we must understand that. Due to increased digitization, 5G expansion, and a rebound in service sectors to pre-Covid levels of growth, Shetty says, companies in the IT, telecommunications, and services sectors are expected to continue hiring.
Seven out of ten tech companies plan to increase headcount in the next few months, suggesting that hiring in the Indian IT sector is likely to increase as well.
According to Shetty, they anticipate a 25-30% increase in demand for tech talent in non-tech industries in 2023, mainly due to the continued digitization of operations as these industries strive for greater scalability.
“The demand for talent in non-tech sectors such as healthcare, food services, construction, and education has increased,” says Saumitra Chand, career expert at Indeed. The marketing sector, one of the first to see layoffs during the pandemic, has even picked up.”
As a result, everything in the job space is changing rapidly. If one cannot adapt to the new paradigm, their job will be at risk.
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