Less hiring, more firing: Automation poses big threat in IT

Cognizant looking at sacking more than 6,000 employees this year. Company says standard practice but is this is an impact of automation?

As the appraisal season begins, ominous signs for employees at Cognizant have begun to emerge. The company may fire more than 6,000 employees this year, according a report in The Economic Times.

According to a Cognizant spokesperson, the move is part of company’s regular appraisal cycle and under performers is likely to be under the radar. Media reports also say that as many as 10,000 employees can lose their jobs.

Job cuts

If the sacking at Cognizant is worrisome then the hiring statistics in other IT companies will add to the stress. Companies are investing more in digitization and automation. For this, they are looking at trimming their costs. This in turn is affecting the hiring process. As per a Business Standard report, number of employees brought on board this year will be 40 percent less as against last year.

This year the hiring process was slow for IT majors TCS, Infosys, Wipro, Cognizant, HCL Technologies and the number went down to 60,000 from 100,000 last year.

What Cognizant has to say?

It is a standard practice for information technology (IT) companies to cut their workforce during a rigorous appraisal process and underperformers or employees who have not taken efforts to reskill will have a tough road ahead. In this sector, it is the bottom one per cent of the workforce that has to take the bitter pill.

Is this a standard practice or is this an automation wave?

IT industry is entering the new phase of automation. This may be good for the company to cut costs but employees may be out of jobs as companies will eliminate redundant roles. About 75 percent of Cognizant's 2.6 lakh-strong workforce is based out of India. The company is focusing on automation and building new digital capabilities. It is also planning to invest in training and re-skilling its team, and in substantially expanding its local workforces in the US and other local markets around the world where it operates. During an earnings call, company’s chief, Francisco D ‘Souza said, “As agile development and the pervasive influence of technology increases, the value of co-location and a consultative approach also goes up.”

He had also said that Cognizant will leverage its scale to prove costs in 2017 and 2018 through cost-optimization of traditional offerings such as applications, infrastructure and process services.

Will machines replace jobs?

A research by human resources (HR) solutions firm, People Strong, has found that automation will eat up quarter of people’s jobs by 2021 in India. As per a 2017 World Employment and Social Outlook report, unemployment in India might go up from 17.7 million in 2016 to 17.8 million (in 2017) and 18 million a year later.

For India, the challenge is job creation than job cuts.

Source: Money Control India