Hyderabad: The ongoing lockdown is likely to have deep impact on the IT and SME sectors of the State. Within the IT and allied sectors, various industry experts suggest that the sector will see job losses ranging from 5 per cent to ten per cent even as new recruitment is frozen completely for a few months. This apart, several companies have offered to cut the variable pay by 20-30 per cent.
“Some companies are resorting to cut the variable pay up to 30 per cent. This is in response to the cancellation of orders or contracts the companies are seeing from their respective clients,” said Murali Bollu, president of industry body Hyderabad Software Exporters’ Association.
The campus recruits normally are asked to report to office around May or June. But now they have to wait at least three months more as the companies have put the recruitments on a freeze due to the lockdown.
“It is just a little over a week that we are seeing this. We do not have enough data to quantify the job loss that will happen due to the lockdown,” he said.
H1B visas
With HIB Visa issue propping up among the trade circles in the US, Murali said this will help IT engineers here. “If visas were to be cancelled, the IT companies and professionals here stand a chance to get that work which will be outsourced. There will be more opportunities,” he added.
According to unconfirmed reports, companies like Cyient, Tech Mahindra, Intergraph, GlobalIT, Hitachi, Infosys and others have announced to cut the variable pay only from 20 to 30 per cent.
Hyderabad is home to about 5.5 lakh IT professionals and the exports from the city have crossed Rs 1.1 lakh crore. The IT companies have been quick to adopt work from home to ensure business continuity.
According to Sandeep Kumar Makthala, president, Telangana Information Technology Association, there could be a job loss of 5 to 10 per cent. This includes the voluntary attrition as well, which is a feature of the IT industry. The job loss is restricted to some verticals only, he clarified. “For instance, travel, airlines, hotel industry are now closed down. The wings handling these segments in IT companies have to be downsized or closed as their key clients are not performing. On the other hand, the manpower requirement is on the rise in banking, financial services, insurance, healthcare, pharma and allied domains,” he explained.
HR
According to Aditya Mishra, director and CEO, CIEL HR Services, the IT companies have put the HR activities on the back burner. Only few companies are now involved in emergency response communication with the employees. Most of the clients are shut and many of the IT companies are finding it difficult to maintain the staff.
Many companies have a business continuity plan for incidents like a riot, strike or other short term disruptions. But the situation now is across the country and across the continents as well. There cannot be a business continuity plan this wide and big, he said. Many are looking to distribute the resources thin so that they continue to fight a little longer.
CII Survey
The CII CEOs Snap Poll on Impact of Covid-19 lockdown on industry, which saw a participation of close to 200 CEOs across sectors, said that a majority of the firms expect revenues to fall more than 10% and profits to decline more than 5% during Jan-March as well as April-Jun quarters. On the jobs front, about 52% of the firms foresee job losses. About 47% that participated in the survey expect less than 15% job loss while on 32% of them expect to shed about 15 – 30% of jobs, once the lockdown ends.
SME
In words of Gopal Rao, Secretary, Telangana Industries Forum, the impact of the lockdown will be more profound on the small and medium enterprises. The production in March happened for three weeks and the revenues generated were spent on paying the loans, instalments and clearing other bills. With no production in the last week, the companies are not in a position to pay for power and other utility bills.
The companies follow a cyclical spend from the revenues they get. According to him, about 3,000 small units are staring at closure. They do not have the inventory nor the cash reserves to operate once the lockdown is removed, he said adding that about 90 per cent of the firms are not in a position to pay the salaries to the staff sans the production. Rao explained that about two lakh jobs, mostly of the daily and casual labour, are on the guillotine.
Work from home concept paves way for gig economy
Hyderabad: The lockdown is bringing changes across sectors. While there will be some job losses, those who have learned to cope with ‘work from home’ schedules will stand a chance to be part of the gig economy, according to GR Reddy, founder and Chief Executive Officer, Hysys Consulting.
“The work from home activity is here to stay. While the IT sector has been using this in case of certain disruptions, the concept is now finding a use in many verticals. This will enlarge the scope for a gig economy,” said the chief of the Hyderabad-based HR services company.
In a gig economy, temporary positions are common and organisations contract with independent workers for short-term engagements.
“This will lead to better salaries to the individual IT professionals,” he said, adding that about 60 per cent of the workforce is now conversant with work from home and its setting up.
According to him, the productivity level at the company level is about 65 per cent, which in the current times is good he said adding that the overall communication from the employers too has increased.
“The communication from the office has increased and now it is also including talks about well-being of family members and not just work outcomes,” said Reddy about his observations.
However, on the downside, companies are retrenching staff as the cash flows have dried up. There could be about ten per cent loss in the number of jobs in the IT sector and fresh recruitments will take at least three to six months, he said. Manufacturing, retail and SME sector will also see a significant reduction in the number of jobs, he added.
Select companies are trying to distribute the available resources for a longer period and therefore cuts in the salaries are inevitable with those at the bottom of the pyramid getting some protection.
“Most of the IT companies have now turned into infra companies with huge landbanks and a lot of work stations. The work from home now has proved that huge infra is not needed. This will cut the costs for the companies,” he said.