CHENNAI // Tens of thousands of employees are being laid off from India’s IT industry, once a global powerhouse of services, in a sign that the country’s demographic dividend might turn into a demographic disaster.
A million Indians enter the workforce every month, on the lookout for well-paying jobs. But prime minister Narendra Modi’s government is struggling to boost employment to match.
According to the most recent data available, only 10,000 jobs in the formal economy were created each month in 2015.
Among the few sectors that have developed over the past two decades, the IT industry became a beacon for fresh graduates looking for white-collar jobs. But successive waves of layoffs — attributed to rising automation, shrinking margins, and a changing business model — are dimming the beacon’s light.
In May, the Mint newspaper reported that the top seven IT companies in India would lay off 56,000 employees this year — double last year's number, and representing roughly 4.5 per cent of the companies' combined workforce.
In all, the US$150-billion (Dh551bn) industry employs about 4 million people.
Among those who were laid off this year was Sunil Kumar, who had worked for nearly 11 years at an IT giant in Bengaluru.
Mr Kumar grew up in a small village in northern Karnataka and was the first college graduate in his family. He found a job that involved back-end work in computerised design for western aircraft manufacturers.
Buoyed by his success, Mr Kumar moved his parents from their village to Bengaluru, to live with his wife and child. He earned about 1.1 million rupees (Dh62,600) a year, so he was able to take a bank loan to purchase a small apartment.
Two months ago, however, Mr Kumar's company asked him to resign. When he refused, he said, he was fired. "All these companies say that automation is the reason, but it isn't like my job is easy to automate," Mr Kumar told The National. "I have so many years of experience doing this. There isn't any sort of machine or computer program that can replicate that."
In the world of Indian IT, opinions are divided over how great an impact automation will have on companies and their workforce.
Somak Roy, an analyst at Forrester Research, believes that companies can, at the present level of technology, automate about a quarter of the most basic functions their employees perform.
“Eventually, the labour force will be cut in a big way because of automation,” Mr Roy said. “You won’t need a lot of entry-level people if you have programs doing their jobs. It’s quite possible that the industry will cease to be a large-scale employment generator in India.”
But Vasumathi, a Chennai-based official with a union called Forum for IT Employees, believes that talk of automation is exaggerated.
“We believe companies are only using it as an excuse, to make it seem as if they’re becoming more technologically efficient,” said Ms Vasumathi, who uses only one name. In truth, she said, the firms are firing employees because they have been unable to adjust to deeper shifts in the business.
When the Indian IT industry started to boom in the early 2000s, it was able to leverage a vast difference in labour and capital costs between India and the US. Companies persuaded their American clients to outsource IT work to them in India, so that it could be completed cheaply.
The costs of labour and capital in India have gone up over the past decade, however. In the Chennai suburb of Siruseri, home to several tech parks and IT companies, a patch of land measuring roughly 435 square feet cost 5,000 rupees in the 1990s. By 2014, the price had shot up to 3 million rupees.
The rapid advance of technology has also left behind employees trained in older programming languages or software suites. In 2015, a study by the National Association of Software and Services Companies, a trade body, calculated that 50-70 per cent of Indian IT workers’ skills would be redundant by 2020.
President Donald Trump’s emphasis on protectionism has also unsettled Indian companies that rely on outsourcing from the US. In May, the Indian IT giant Infosys announced that it would create 10,000 jobs in the US to serve its customers there, rather than rely upon back-office workers in India or employees sent to the US on guest-worker visas.
In relative terms, the IT industry is not a mass employer, but “it has an outsized hold on the national imagination, since relatively few other formal white-collar jobs have been created over the past decades”, said Mihir Sharma, a fellow at the New Delhi-based Observer Research Foundation.
“The political impact of a decline in hiring will be far greater than the real economic impact,” Mr Sharma said. “First, because Indian politics tends to respond in an exaggerated fashion to middle-class or white-collar concerns, and second, because closing off a career option, even a low-probability option, might give rise to anger and concern that times are becoming tougher, and not better, for young Indians.”
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
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NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
Learn more about Qasr Al Hosn
In 2013, The National's History Project went beyond the walls to see what life was like living in Abu Dhabi's fabled fort:
How to come clean about financial infidelity
- Be honest and transparent: It is always better to own up than be found out. Tell your partner everything they want to know. Show remorse. Inform them of the extent of the situation so they know what they are dealing with.
- Work on yourself: Be honest with yourself and your partner and figure out why you did it. Don’t be ashamed to ask for professional help.
- Give it time: Like any breach of trust, it requires time to rebuild. So be consistent, communicate often and be patient with your partner and yourself.
- Discuss your financial situation regularly: Ensure your spouse is involved in financial matters and decisions. Your ability to consistently follow through with what you say you are going to do when it comes to money can make all the difference in your partner’s willingness to trust you again.
- Work on a plan to resolve the problem together: If there is a lot of debt, for example, create a budget and financial plan together and ensure your partner is fully informed, involved and supported.
Carol Glynn, founder of Conscious Finance Coaching
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TALE OF THE TAPE
Floyd Mayweather
- Height
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Conor McGregor
- Height
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Test
Director: S Sashikanth
Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan
Star rating: 2/5
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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The specs: 2018 Peugeot 5008
Price, base / as tested: Dh99,900 / Dh134,900
Engine: 1.6-litre turbocharged four-cylinder
Transmission: Six-speed automatic
Power: 165hp @ 6,000rpm
Torque: 240Nm @ 1,400rpm
Fuel economy, combined: 5.8L / 100km
The Light of the Moon
Director: Jessica M Thompson
Starring: Stephanie Beatriz, Michael Stahl-David
Three stars
MATCH INFO
Everton 2 Southampton 1
Everton: Walcott (15'), Richarlison (31' )
Southampton: Ings (54')
Man of the match: Theo Walcott (Everton)
The Bio
Hometown: Bogota, Colombia
Favourite place to relax in UAE: the desert around Al Mleiha in Sharjah or the eastern mangroves in Abu Dhabi
The one book everyone should read: 100 Years of Solitude by Gabriel Garcia Marquez. It will make your mind fly
Favourite documentary: Chasing Coral by Jeff Orlowski. It's a good reality check about one of the most valued ecosystems for humanity
THE SPECS
Engine: 6.75-litre twin-turbocharged V12 petrol engine
Power: 420kW
Torque: 780Nm
Transmission: 8-speed automatic
Price: From Dh1,350,000
On sale: Available for preorder now
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The specs
Engine: Four electric motors, one at each wheel
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Price: From Dh825,900
On sale: Now
Killing of Qassem Suleimani
Electric scooters: some rules to remember
- Riders must be 14-years-old or over
- Wear a protective helmet
- Park the electric scooter in designated parking lots (if any)
- Do not leave electric scooter in locations that obstruct traffic or pedestrians
- Solo riders only, no passengers allowed
- Do not drive outside designated lanes
Summer special
The biog
Name: Dhabia Khalifa AlQubaisi
Age: 23
How she spends spare time: Playing with cats at the clinic and feeding them
Inspiration: My father. He’s a hard working man who has been through a lot to provide us with everything we need
Favourite book: Attitude, emotions and the psychology of cats by Dr Nicholes Dodman
Favourit film: 101 Dalmatians - it remind me of my childhood and began my love of dogs
Word of advice: By being patient, good things will come and by staying positive you’ll have the will to continue to love what you're doing
Specs
Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
Price: From Dh98,800
Available: Now
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
THE BIO
Favourite place to go to in the UAE: The desert sand dunes, just after some rain
Who inspires you: Anybody with new and smart ideas, challenging questions, an open mind and a positive attitude
Where would you like to retire: Most probably in my home country, Hungary, but with frequent returns to the UAE
Favorite book: A book by Transilvanian author, Albert Wass, entitled ‘Sword and Reap’ (Kard es Kasza) - not really known internationally
Favourite subjects in school: Mathematics and science
West Indies v India - Third ODI
India 251-4 (50 overs)
Dhoni (78*), Rahane (72), Jadhav (40)
Cummins (2-56), Bishoo (1-38)
West Indies 158 (38.1 overs)
Mohammed (40), Powell (30), Hope (24)
Ashwin (3-28), Yadav (3-41), Pandya (2-32)
India won by 93 runs
The biog
Favourite colour: Brown
Favourite Movie: Resident Evil
Hobbies: Painting, Cooking, Imitating Voices
Favourite food: Pizza
Trivia: Was the voice of three characters in the Emirati animation, Shaabiyat Al Cartoon
