Global tech lay-offs surge, but India likely to see limited impact (2024)

Amid widespread global lay-offs in the tech sector of anywhere between 7 and 30 per cent, India may see more contained workforce reductions, according to industry experts.

Subramanyam S, the CEO & Founder of Ascent HR Technologies Pvt Ltd, said, “Even if we consider that the cost arbitrage would favour the Indian workforce, there still may be a reduction of 10-15 per cent, with a possible hiring freeze as the best case scenario.”

Lay-offs are expected to stay for at least another year until the global outlook stabilises after the US elections and reduced war mongering, be it in the EU, West Asia, or South Asia, Subramanyam noted.

Freshers to be hit

He added that in India, the most affected would be the campus hires who may not be onboarded anytime soon. Alongside, the hiring season may be delayed by over 12-18 months, which may affect next year’s freshers. “Cost squeezes in the overseas business would also put pressure on bench strength. Largely affected industries would be Tech, Banking, and Fintech.”

Neeti Sharma, CEO of TeamLease Digital, resonated that hiring freezes and rescinded job offers are becoming common, particularly affecting recent graduates. She said 30 per cent of planned hiring for fresh tech graduates in 2024 has been put on hold or cancelled, reflecting a cautious approach amid economic uncertainty.

Phased lay-offs are also gaining popularity, with companies spreading lay-offs over several quarters so businesses can adjust gradually to market conditions while minimising immediate disruptions.

On the other hand, despite lay-offs, many companies are maintaining operations through quiet hiring by shifting internal employees to new roles or bringing in contractors and part-time workers. “50 per cent of large enterprises in India have adopted this approach to sustain productivity without increasing full-time headcount,” the TeamLease Digital CEO said.

“The lay-offs are driven either by funding drying out or new job roles up the value chain not opening up at scale. IT Services have slowed down hiring to focus more on retention and reorganisations.”

TeamLease’s Sharma observed that so far, tech and start-up sectors, especially e-commerce, ed-tech, and fintech, have seen significant lay-offs. During 2023-24, over 23,000 Indian start-up employees lost their jobs, with 40 per cent in the ed-tech sector.

“This trend is largely due to pandemic-era overhiring and subsequent market corrections. Companies are reducing costs by cutting jobs in non-core or underperforming divisions. 60 per cent of mid-size tech firms in India are targeting middle management and redundant entry-level roles, often replacing them with automation to improve efficiency,” she said.

A growing focus is on retaining only top performers, with 45 per cent of companies in the tech and start-up sectors implementing performance-based lay-offs to maintain a leaner, more productive workforce, she observed. “Alongside, companies are increasingly offering voluntary separation programmes, including early retirement packages. This strategy helps lower costs while minimising the negative impact on employee morale and public perception.”

Global recession fears

Sharma also stated that while global recession is expected to peak in the next two years, India is not on that trajectory yet. “We are seeing green shoots in fresher hiring, especially for awareness or basic competency in AI/ ML, Data Analysis, and Software Development.”

Noting that the global wave of tech lay-offs that began in 2023 has not only persisted, but intensified in 2024, Sanju Ballurkar, President, Experis, ManpowerGroup India echoed, “The ongoing lay-offs are primarily driven by weak financial performance, an uncertain economic outlook, the strategic redirection and reprioritisation of technology investments, and efforts to enhance cost efficiency through global delivery models.”

According to Layoffs.fyi, this year, Intel has laid off 15,000 employees, followed by Tesla at 14,000 and SAP at 8,000. IBM recently shut down its China R&D centre, letting go of 1,000 employees.

Despite these global lay-offs having significantly impacted Indian companies, the scale of downsizing is not as severe as in other regions, Ballurkar said. “The Indian firms are indeed experiencing layoffs, but this is somewhat offset by the cost advantages they offer, which are, in some cases, leading to the creation of new roles,” he added.

He noted that the analysis of lay-offs from major companies showed reductions as high as 15 per cent in their workforce. The tech industry is currently navigating a critical phase of strategic realignment. However, there is hope that geopolitical stability and the establishment of new governments globally will help stimulate a market recovery.