Pink-slip dread: How Donald Trump has made life difficult for Indian IT companies

A demographic and economic disaster is brewing as IT companies are firing engineers by the droves. In April, Wipro was reported to have fired 600 employees. In January, Infosys let go of close to 9,000 employees and Cognizant, news report suggests, will be giving the pink slip to anywhere between 6,000 to 10,000 employees. This sadly is just the tip of the iceberg.

A combined effect of automation, skill gap, and adverse changes in the H1-B visa reforms in the US and Australia has meant that Indian IT companies are revamping themselves to deal with the new market conditions. The incidental cost of this transition is the massive layoffs, the consequences of which cannot be ring-fenced to the IT sector alone.

Consider the stats: The top four IT companies of India employ nearly a million and incur a cost of close to Rs 1.16 lakh crore on salaries. The consumption habits of these employees support a cross-section of sectors like FMCG, housing, banking credit, consumer goods, clothing, transportation, and much more. Reportedly, around 56,000 engineers are on their way to being jobless, while the total headcount loss can come to over 6 lakh in the next three years.

Consequently, Infosys has committed to hiring 10,000 Americans over the next two years and will open four new technology hubs in the US. Apart from visa reforms, a report suggests that close to 80 per cent of engineers are unskilled. Dangers loom ahead, and the government must take proactive actions to put off an impending debacle.