Whether, it’s tech giants, consulting giants, or manufacturing heavyweights, mass layoffs have already taken place or are in progress across several industries worldwide
Raghunath Mahapatra
Intel Corporation (Intel), the American multinational tech giant, with a 15 percent, roughly 15,000 jobs, reduction in its global workforce, has sent shockwaves in August 2024. The tech giant justifies it as a part of an effort to reduce costs by $10 billion in 2025. Due to its rapid diversion to growing areas like artificial intelligence (AI) and cybersecurity, Cisco took the same path; a job reduction of 7 percent followed its February 2024 laid-off of 4000 employees. These tech layoffs experienced a surge in August with 27K jobs which is the highest since January. These layoffs impacted many countries, including the US, China and Canada.
According to Layoffs. fyi (a startup founder that’s been tracking tech layoffs since COVID-19), in a stunning reversal, the tech industry—once the unstoppable engine of modern innovation—has laid off over 139,534 employees by 2024, which involves 457 tech companies. On average, about 555 employees lost their jobs every day in the last two years, which translates to 23 workers every hour across the globe. With tech layoffs at their highest since the 2001 dot-com crash, the job hunt is getting harder and many in the industry are being forced to settle for pay cuts if they can find a new gig. It’s projected that by 2030, automation and AI will eliminate 20 million manufacturing jobs in the USA, and with 25% of American employment highly susceptible to automation, this results in 73 million job losses over the next five years.
Mass Layoff
Whether, it’s tech giants, financial biggies, consulting giants, or manufacturing heavyweights, mass layoffs (particularly in the tech sphere) have already taken place or are in progress across several industries worldwide and it is even spilling into medium and small businesses and start-ups across sectors. Besides tech companies, businesses in warehousing, transportation, construction, manufacturing, wholesale trades and the real estate sector are also on the verge of massive job cuts if it has not already begun.
Among many causes of this huge lay-off (which may continue at least in 2025) the economic ramifications, inflation, high interest rates, over-hiring during the pandemic, cuts in hiring and rise in AI automation and the collapse of Silicon Valley Bank are identified as some of the important factors. It’s predicted that the impacts are likely to continue for at least another year, in the form of cost-cutting, spiraling impacts on other non-tech companies.
The former Secretary-General of the United Nations, Ban Ki-Moon has aptly once said; “In the interconnected web of global commerce, layoffs in one corner of the world reverberate throughout, exposing the fragility and interdependence of our economies”. If we examine the Indian perspective through this lens it can be said that it won’t be possible to completely remain aloof from the vagaries of these global tech layoffs which threaten to continue in the years to come, even though India’s tech industry has proven its ability to effectively cushion high-magnitude economic meltdowns, many times before.
In the present day, the Indian tech workers don’t enjoy that huge cost advantage over other countries, rather they are compared to their peers in the Western world which takes away some advantages from the Indians. Of course, amid widespread global lay-offs in the tech sector of anywhere between 7 percent and 30 percent, India may see more 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 favor the Indian workforce, there still may be a reduction of 10 percent-15 percent, with a possible hiring freeze as the best case scenario”. It’s also expected that the layoffs in India will be limited to the tech sector only (the start-ups being the most vulnerable) as several global companies are looking to relocate their downsized operations in India for greater cost efficiencies.
The moot question that is discussed is whether these continued worldwide tech layoffs are due to the absolute shortage of manpower or it’s due to the shortage of specifically skilled manpower, more empowered than the present tech employees. It’s interesting to note that at the time of this tech gloom, EY and iMocha’s report reveals that 81 percent of companies have faced a shortage of ‘power user or developer’ tech skills, while only 19 percent had established a skill taxonomy. The demand for skilled tech workers has surged in recent times, not just in the field of information and technology, but across all industries.
The most paradoxical situation is that despite the barrage of pink slips, the scene is not all gloom and doom for the tech ecosystem. According to the estimates of MGI Research, global tech spending would rise from $8.51 trillion in 2022 to $11.47 trillion in 2026, meaning a CAGR of 7.75 percent. As per some research, it’s probably the most repeated prognostication of the year: Robots are eventually going to take your job, and probably sooner than you think.
India’s Leadership
As it turns out, that would be the wrong thinking, and by a long shot. In a new Korn Ferry study that includes a sweeping country-by-country analysis, the biggest issue isn’t that robots are taking all the jobs—it’s that there aren’t enough humans to take them. Indeed, the study finds that by 2030, there will be a global human talent shortage of more than 85 million people, or roughly equivalent to the population of Germany. Left unchecked, that talent shortage could result in about $8.5 trillion in unrealized annual revenues in 2030.
It can’t be denied that much of the shortages are based on simple demography. By 2030, Russia could have a shortage of up to 6 million people, and China could be facing a shortage twice as large. The United States could also be facing a deficit of more than 6 million workers, and it’s worse in Japan, Indonesia and Brazil, each of which could have shortages of up to 18 million skilled workers. In tech alone, the US could lose out on $162 billion worth of revenues annually unless it finds more high-tech workers. “As with many economies, the onus falls on companies to train workers and also to encourage governments to rethink education programs to generate the talent pipelines the industry will require,” the industry experts suggest. Indeed, India could become the next tech leader; many studies suggest that the country could have a surplus of more than 1 million high-skilled tech workers by 2030.
Thus, to come out of this tech layoff gloom and its probable vicious impacts, all governments and organizations must make talent strategy a key priority and take steps now to educate, train, and upskill their existing workforces in the newer technology front which seems to be grasping our work and other spheres.
(The writer is a former Senior Project Associate at HSS Department, IIT Kanpur)
