TCS, Infosys, Wipro, Cognizant, HCL, Tech Mahindra, Other IT Firms To Lay Off 30 Lakh Employees
Job Cuts: "TCS, Infosys, Wipro, HCL, Tech Mahindra and Cognizant and others IT Firms planning for a 3 million reduction in low-skilled roles by 2022 because of RPA up-skilling," the PTI report says.
According to a PTI report, leading IT Companies TCS, Infosys, Wipro, HCL, Tech Mahindra, Cognizant and others are planning to lay off as many as 30 lakh employees. This massive lay off exercise will be carried out by 2022. The move will help these companies save a whopping USD 100 billion mostly in salaries annually and robot process automation (RPA) up-skilling.
These IT sector employs around 16 million, of them around 9 million are employed in low-skilled services and BPO roles, according to Nasscom, these 9 million low-skilled services and BPO roles, 30 per cent or around 3 million will be lost by 2022, principally driven by the impact of robot process automation or RPA, as per PTI report.
“This is a USD 100-billion in reduced salary and other costs, but on the flipside, it offers a likely a USD 10 billion boon for IT companies that successfully implement RPA, and another a USD 5 billion opportunity from a vibrant new software niche by 2022. Given that robots can function for 24 hrs a day, this represents a significant saving of up to 10:1 versus the human labor,” says the PTI report.
Meanwhile, the report has also claimed that emerging economies mostly India and China face the most risk of technology driven disruptions which can impact up 85 per cent of jobs in countries like Kenya and Bangladesh. India and China are at greatest risk of skills disruption, while Asean, the Persian Gulf and Japan are at the least risk, the PTI report says.
Of these 9 million low-skilled services and BPO roles, 30 per cent or around 3 million will be lost by 2022, principally driven by the impact of RPA, the report says, according to PTI.
Roughly 0.7 million roles are expected to be replaced by RPA alone and the rest due to other technological upgrades and upskilling by the domestic IT players, while it the RPA will have the worst impact in the US with a loss of almost 1 million jobs, according to a Bank of America report on Wednesday.
Based on average fully-loaded employee costs of USD 25,000 per annum for India-based resources and USD 50,000 for US resources, this will release around USD 100 billion in annual salaries and associated expenses for corporates, the report says.
What Is Robot Process Automation (RPA)?
Robot process automation (RPA) is application of software, not physical robots, to perform routine, high-volume tasks, allowing employees to focus on more differentiated work. It differs from ordinary software applications as it mimics how the employee has worked instead of building a workflow into technology from ground up and thus minimising time to market and greatly reducing cost over the more traditional software-led approaches.
Why These Job Cuts?
Offshoring helped domestic IT sector to grow from around 1 per cent of GDP in 1998 to 7 per cent today, a highly strategic sector for its economy and has also significantly outgrown their Western peers (mainly Accenture, Capgemini and Atos) with an annual revenue growth of 18 percent between 2005 and 2019.
Another key reason for the RPA-driven job loses is that many countries that had offshored their work in the past are likely to bring the jobs back to their own home markets. Developed countries will also look to increasingly bring back offshored IT jobs and either use native IT workers or domestic software robots like RPA to secure their digital supply chain and ensure future resiliency of their national technology infrastructure, reasons the report.
(Based on Inputs By PTI)