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Forget job losses, Indian IT may hire up to 150,000 this year: Nasscom Chairman

Forget job losses, Indian IT may hire up to 150,000 this year: Nasscom Chairman

Forget job losses, Indian IT may hire up to 150,000 this year: Nasscom Chairman
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By Kritika Saxena  Aug 30, 2019 9:59:09 AM IST (Updated)

With consumer seeing slowdown in sectors like auto and FMCG, an immediate fear is the manpower heavy IT services sector firing employees.

With consumer seeing slowdown in sectors like auto and FMCG, an immediate fear is the manpower heavy IT services sector firing employees. However,  Keshav Murgesh, chairman of NASSCOM, believes that the skills that are not relevant may be hived off but Indians will still continue to be net hirers.

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“Job losses will always keep happening as long as people are not upping their skill or being up-to-date in terms of the new models of engagement. While in specific areas and within specific companies even last year you saw job losses but the reality is the net-net growth in jobs in this sector in India was 150,000 people. We had actually from NASSCOM predicted 120,000 but we actually increased our guidance and went to 150,000. We expect that that number will continue to hold good in spite of all the changes that is taking place in the world around us,” he said.
Nasscom is reiterating a point it has been making for the last 3 years. With automation and new technologies becoming more and more relevant for clients, it is critical that IT services companies keep upskilling their manpower to fit the changing needs.
While every year, Indian IT companies retrench the bottom 0.5 percent of their workforce, which usually includes employees on the bench and the bottom performers, report indicated that last year 1.2-2 percent of employees were retrenched.
Most companies did not officially confirm the figures but FY18 and FY19 were clear indicators of IT companies seeing the brunt of automation. As we walk deeper into FY20, most Indian IT companies are now focused on reskilling their employees to fit the new tech and digital needs of the client.
That is evident by the increasing percentage of digital revenues for IT companies like TCS, Infosys, Tech Mahindra among others. Nasscom believes it is at the forefront of ensuring the Indian IT industry stays relevant when it comes to skilling its workforce.
“If you look at the kind of demand that we are seeing for jobs in all the new areas, it is running into 700,000-800,000 people and the prediction is, in 2-3 years India will need almost 2 million people in those areas and that is why there is a big hurry from NASSCOM to drive the future skilling model and train almost 2 million people in the next 1-2 years and 4 million people in the next 3-4 years,” said Keshav.
“The big focus by the central government, the state governments, individual companies and NASSCOM is the future skill agenda because that is critical the way business is going to be done is completely different from how it was done in the past and therefore having people with the right skills is important and you have to expect where people don’t have certain skills they are going to be moving away from the job market and where they upgrade the skills to the new areas they will always be in demand."
Another concern when it comes to employment is the massive decline seen in H1B visa’s. On an average, half of the H1B visas filed for in FY19 were declined. Nasscom said it is engaging with the US government on this to help outline the importance of India workforce and talent to the growth of US companies.
“It’s a case of our making a point before the US authorities who deal with these rejections to explain to them that while 67 percent of all H1B visas issued come to India. The reality is only 2.6 percent of that actually go to the top 7 Indian IT companies. The rest really are going to international companies who are sourcing talent from India. The reality therefore is that as long as rejections continue to rise, it only will affect the competitiveness of US companies,” said Keshav.
Here is an edited transcript of the interview:
Q: There seem to be initial reports suggesting that H1B visa rejections are at all-time high. In the case of TCS for instance it used to be 5 percent and it has gone up to about 57 percent. Infosys also faced around 67 percent of rejections. So based on the initial reports on visa rejections, how negative is that for Indian IT?
A: It’s a case of our making a point before the US authorities who deal with these rejections to explain to them that while 67 percent of all H1B visas issued come to India. The reality is only 2.6 percent of that actually go to the top 7 Indian IT companies. The rest really are going to international companies who are sourcing talent from India. The reality therefore is that as long as rejections continue to rise, it only will affect the competitiveness of US companies.
Q: But there is something that you have seen this time, right?
A: Some of the Indian companies we have seen that and therefore, what we have done from NASSCOM point of view is to actually land up in Washington DC, interact with the powers there, explain to them that the benefits and the advantages that India has to offer and how important this talent is in the future success of the US and its business itself and I think they are getting it, they are able to understand that Indian companies and international companies operating from India need to have the same level field.
Q: Considering that you have been engaging in conversation, what are the changes that are likely to happen in the near-term because the fact is that the visa rejections have gone up, visa process has become more cumbersome? So there have been protectionist woes in the industry. So what are the changes that are likely in the near-term?
A: If you look at the jobs report coming out of the US, April 2019 report, you will see that they have a deficiency of almost 7.5 million people of which 67 percent are people who need a technology or technical skills and H1B visa that we are talking about, the total is only 85,000. So the reality is that the US also realizes that they need people with this kind of talent who are technologically abled in order to be able to help them deal with the kind of disruption that they are seeing in business models and therefore, from our perspective our job is to keep on interacting with the powers, with the administration.
Helping them appreciate and understand how US competitiveness can get impacted if they do not have the right policies as well as explain to them how Indian companies are actually contributing to the economy of the US, contributing to jobs in the US, contributing more to the GDP of the US than even the 6 big states of the US. When we present some of this and also present our jobs reports and showcase that the salaries that Indian companies pay in the US is almost $3,000-4,000 higher per year than the US companies. It completely opens up their eyes in different formats. So it’s a journey we have to go through and you should expect to see only positive changes as a result of that.
Q: Another question around jobs has been jobs in India because of the increased local hiring across most of the foreign geographies, most of the onshore geographies, jobs in India have become lesser. The number of engineering graduates that are coming out, the relevant graduates that are coming out are not all getting placed. So keeping that in mind we saw job losses last year, we are seeing job losses across sectors. What is likely to be the situation with job losses in IT?
A: Job losses will always keep happening as long as people are not upping their skill or being up-to-date in terms of the new models of engagement. While in specific areas and within specific companies even last year you saw job losses but the reality is the net-net growth in jobs in this sector in India was 150,000 people. We had actually from NASSCOM predicted 120,000 but we actually increased our guidance and went to 150,000. We expect that number will continue to hold good in spite of all the changes that is taking place in the world around us.
Q: So you are saying that if there will be job losses even then net-net that 150,000 odd will still continue by way of increased newer skills being added?
A: Yes absolutely and therefore, the big focus on by the central government, the state governments, individual companies and NASSCOM in the future would be on the skill agenda because that is critical.  The way business is going to be done is completely different from how it was done in the past and therefore having people with the right skills is important and you have to expect where people don’t have certain skills they are going to be moving away from the job market and where they upgrade the skills to the new areas they will always be in demand. In fact, if you look at the kind of demand that we are seeing for jobs in all the new areas I spoke about, it is running into 7-8 hundred thousand people and the prediction is in 2-3 years India will need almost 2 million people in those areas and that is why there is this big hurry from NASSCOM to drive the future skilling model and train almost 2 million people in the next 1-2 years and 4 million people in the next 3-4 years.
Q:  We spoke about the central government, not much for Indian IT in the budget, there are a lot of various sectors asking for reforms from the government. So, what more does an Indian IT need to be able to scale?
A: I don’t think there is any storm that is facing the Indian IT, again I believe that if there is a recessionary trend that is being seen globally and again we will have to wait to see that really happens, it actually augurs well for the industry because people need to save more money, people need to be smarter in terms of how they run their companies and therefore it would actually result in increased budgets for the industry and NASSCOM members.  So from that point of view I am reasonably comfortable. As far as the government is concerned I think the relationship between the government at the central level as well as at the state levels and with NASSCOM has never been as strong as it has been in the recent few years.
In fact, the entire agenda of the government is - digital first agenda - and if you look at NASSCOM’s own thinking, our entire focus is 'Think Digital Think India'. So there is a strong alignment between what the IT ministers Shri Ravi Shankar Prasad says, Prime Minister says and what we at NASSCOM also say. From my perspective and from NASSCOM’s perceptive we will continue to focus on working synergistically with each other and taking forth the opportunity that Indian IT has to provide to the world, if you ask me.
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