COVID-19: IT, BPO sectors lose 30,000 jobs, likely to let go of more

The COVID-19 pandemic has led to about 30,000 jobs being lost in the IT and BPO sectors in India, with 60,000 being sent on leave without pay (or furloughs), conversations with a number of stakeholders reveal.

The estimated number of job losses translates to about 0.68 percent of the 43.6 lakh employed by the Indian IT and BPO sectors.

But what’s worse is that the conversations – with sources in NASSCOM, HR consulting firms, employee associations and IT/BPO companies – reveal that the second quarter could lead to more job losses.

"An estimated 25,000-30,000 job losses have been seen across IT, BPO and allied services,” an industry source said, adding that many of these job losses took place in the micro, small and medium enterprises where clients are cutting on spending. “Furloughs are much higher at about 50,000-60,000.”

Several startups that had just started to break even are seeing a sudden vendor consolidation and budget cuts that are leading to massive layoffs across the sector; said an executive from an HR consultancy group.

The HR head of a leading IT company, who did not want to be named, warned that clients were delaying payments and cutting back on spending and that the “July to September quarter may see more pressure and possibly more job losses.”

The executive added that while IT firms mostly stuck to letting go of staff who were either on the “bench” or among the bottom performers, the pressure on BPOs was severe.

Companies like Cognizant and IBM have reportedly let go of bottom performers in large numbers – leading even to instances of the threat of legal action. Cognizant said that it routinely reviews performance and that recent reports about large job losses were inaccurate. Infosys, another company, which reportedly laid off some staff also said it lets go for of some people every year following a performance review.

Besides layoffs, several companies have resorted to furloughs in a bid to control costs, especially for projects where clients belonged to sectors such as non-essential retail, hospitality and travel – the hardest hit in the pandemic.

“Sectors such as auto, retail, manufacturing, hospitality, tourism have been hit badly and

The CEO of a Bengaluru-based IT consultancy, which handles staffing requirements of several companies, pegged the number of furloughs at 55,000.

IT companies, a bulk of whose costs are manpower-related, have also cut salaries, including Tier I players such as TCS, Infosys and Wipro.

At an average across the industry, senior management has seen pay cuts of between 15-20 percent while mid-management has seen cuts of 10-15 percent on average. Those earning below Rs 20 lakh, are in many cases, not included in the pay cut cycle.

"Employees at executive roles have been hit with pay cuts ranging from 10-20 percent,” said a Mumbai-based HR executive. “Amongst the CVs we have received, many are from the IT sector where people have lost jobs or are unhappy with pay cuts.”