Insights and Trends into India’s Tech Sector: 37,000 Startups and 190,000 Layoffs in the Last Three Years

The latest revelation of Google’s layoffs, which are reportedly targeting the entire Python team, is consistent with a wider trend in the labor market for the IT industry. But neither Google nor the US are the only places where this phenomenon occurs. An estimated 190,000 IT workers in India have lost their jobs in the last three years; of these, around 70,000 were let go by the “Big Four” tech companies alone, while an additional 37,000 were let go by more than 130 start-ups.

Insightful data about layoffs, job creation, and evolving trends was shared with News18 by Ramesh Alluri Reddy, CEO of TeamLease Degree Apprenticeship, the company’s flagship blended learning program intended to close the skill gap in the workforce. TeamLease is a major player in the Indian human resources industry.

Reddy claims that the years 2022–2024 were turbulent for the IT industry. He said, “With the industry reeling from the pandemic, workforce adjustments, automation, economic slowdowns, and restructuring efforts unleashed a pandemonium of wild scrambles for AI adoption.”

The difficulties in the labor market were worse, as employment offers fell 21% in December 2023 compared to December 2022. Although there was a minor increase in hiring for Indian IT firms in the first quarter of the year compared to the previous year, prudence was advised. Large companies have changed their hiring practices, reducing campus hiring and freshmen offers.

Giants in the industry like TCS, Infosys, and Wipro have restructured significantly, resulting in the loss of tens of thousands of jobs across multiple quarters. The COVID epidemic exacerbated difficulties for established IT service providers by speeding up automation and digital transformation. Reddy claims that in order to remain competitive, this change has forced a reevaluation of labor strategy and the implementation of new technology.

He emphasized that while industry heavyweights like Google and Microsoft shift their focus to research and development, startups face macroeconomic uncertainty that results in widespread layoffs in industries like e-commerce, finance, and e-education.

More precisely, startups always struggle to get financing, in contrast to large IT corporations with large budgets. Their respective capacities to manage economic uncertainty and the growing discrepancy between hiring and layoffs are markedly different as a result of this financial mismatch.

There was especially disruption in the edtech sector. At least 25 Indian edtech companies have made significant changes since last year, including all seven unicorns, including Byju’s, Unacademy, Vedantu, Physics Wallah, and others. Some of these changes include staff layoffs. 14,816 people lost their employment in the edtech industry alone during this turbulent time, according to Reddy.

Other industries, such as fintech, e-commerce, and rapid delivery platforms, were also affected by the layoff effect as businesses struggled to restructure and reduce costs in order to respond to shifting market conditions.

“To date, two major fintech companies have laid off 1500 employees apiece, accounting for nearly 60% of all fintech layoffs to date,” the TeamLease official said, adding that a well-known e-commerce company has announced workforce reductions of more than 1,000 employees due to market challenges and the need to improve operational efficiency.

MARKET TRENDS AND DYNAMICS
A anticipated 10% rise in employment inside Indian firms offered some optimism among the layoffs of IT heavyweights and Indian startups. The expansion of Global Capability Centers (GCCs), which are seeing a continual increase in the number of jobs they seek, is driving this spike.

Reddy brought out the fact that there are already 1,600 GCCs in India, with 1.6 million workers working there. By 2025, the number of GCCs is predicted to reach 2,000, and they would employ between 2.2 and 3.2 million people.

A closer look at the characteristics of the labor market indicates a steadfast need for well-established skill sets, including testing, software development, SAP knowledge, and automobile design. Meanwhile, exciting employment options are also presented by developing technologies like AI, Big Data, and Machine Learning.

Furthermore, the need for senior positions like cloud specialists, Java developers, full-stack engineers, cybersecurity experts, and data architects has increased the most, indicating a proactive approach to keeping up with changing technology environments.

Reddy claims that the most notable development is the rise in apprenticeship participation in the technology industry, which is assisting businesses in cost containment in the face of an unstable external environment. Through apprenticeships, businesses may educate new hires on skill sets relevant to the sector while hiring them at a lesser cost—a “try & buy” approach. According to data, the IT industry has had the most growth in apprenticeship involvement among India’s top businesses, growing by a startling 27.6 times in only the previous four years alone.

“As more and more businesses, particularly multinational corporations (MNCs), realize how well apprenticeship programs can meet their workforce demands, we are seeing the first signs of this change. The IT/ITES industry saw a sharp rise in the number of apprentices from 3,208 in 2018–19 to a staggering 88,678 in 2023–24, indicating the sector’s rising embrace of apprentices, the speaker said.

HIRING TALENT FROM OUTSOURCES
Additionally, an emerging trend in the industry is the growing propensity of IT firms to outsource talent acquisition. Reddy claims that, considering the possibility of lower returns, one should wonder about the worth of substantial internal training initiatives. As a result, companies are using Managed Training Services (MTS) Models and contracting out the recruitment, development, and retention of personnel to outside SMEs. This eliminates the need for an internal recruiting infrastructure while streamlining processes, lowering expenses, and increasing access to talent.

According to Reddy, companies that prioritize talent development via apprenticeship-based certification and training might contribute $1 trillion to the GDP by 2030 if they follow the estimates in the latest CII study on Unicorn 2.0.

He said that companies may develop talent and meet labor demand by offering organized training. via the acquisition of practical skills, people may enhance their worth within the startup ecosystem via apprenticeships. Additionally, by working with academic institutions and vocational training centers, they provide entrepreneurs with an affordable way to get trained personnel. Growth and vibrancy in the startup ecosystem are fostered by this mutually beneficial partnership.