The COVID-19 pandemic disrupted economies and industries worldwide, although the Tech sector experienced a unique set of circumstances. While many sectors struggled with business closures and layoffs, the Tech sector was on a hiring spree, driven by the accelerated demand for digital solutions, remote work, and other online services.
In the early days of the pandemic, some companies saw the rapid acceleration of digital transformation as a potential source of permanent growth. Companies in sectors such as Finance, Healthcare, Retail, and Manufacturing had to quickly pivot their operations online, leading to a surge in demand for Tech talent to develop and maintain their technology infrastructure. For instance, e-commerce experienced a significant boost as people turned to online shopping due to lockdowns and social distancing measures. This led to increased demand for Tech professionals to develop and manage e-commerce platforms, payment gateways, logistics systems, and cybersecurity measures.
Due to the high demand, Tech companies experienced growth in many areas during the crisis, providing essential services or solutions, such as cloud computing, collaboration tools, telemedicine, and online entertainment. We saw companies such as Accenture, Amazon, Cognizant, IBM, Meta, Alphabet, Zoom, Netflix, etc. expand their workforce to meet the increased demand for their products and services, leading to increased hiring in the sector.
The surge in the Tech sector drove the recruitment market into a frenzy, companies competed for talent by offering lucrative pay packages and throwing big money at new endeavours, more than 100% in some cases. Furthermore, this has led to a jump in direct employment availability in the Indian market. In the 2020-21 financial year we saw 4.47 million roles available, compared to that of 2021-22 at 5.1 million, an increase of 0.445 million jobs. This trend has been reflected in the Economic Survey, which reports an exponential growth rate of the Tech sector in India, from a rate of 2.1% in 2020-21 to a staggering 15.5% in 2021-22. However, the latest reports predict a more moderate growth rate of 10% in the fiscal year 2023.
Nevertheless, as the industry began to stabilize and return to its prior trends, many companies realized that their expectations did not come to fulfilment. As a result, they were faced with difficult decisions about how to right-size their operations in a post-pandemic world, which led to sudden layoffs in response to changing market conditions. The reasons for these layoffs varied, including inflation, higher interest rates, over-hiring, and pandemic job correction. Unfortunately, the layoff trend we’ve seen quickly gained momentum and had a significant impact on the industry globally. In 2022 alone, we saw employees getting laid off from 1,056 organizations, resulting in a total of 164,576 job losses.
This trend was particularly acute in the tech sector, with 642 companies laying off employees, resulting in a total of 186,877 job losses in 2023. Notably, large tech giants like Amazon (27,150), Meta (21,000), Accenture (19,000), Google (12,000), Microsoft (10,000), Phillips (10,000), Ericson (8,500), Salesforce (9,000), and many others were among the companies that laid off significant numbers of employees.
Despite the prevailing global trend of layoffs in 2023, in India we have seen ongoing hiring in the Tech industry, particularly in leadership roles. This is attributed to businesses shifting shared services positions to the Indian market, due to its abundant talent pool and economic efficiencies. The Tech sector recognises the immense potential in India and seeks to capitalise on its skilled professionals and favourable cost structures. This strategic move allows companies to enhance their operations, leverage local expertise, and gain a competitive advantage.
In conclusion, the COVID-19 pandemic has presented unique challenges and opportunities for the Tech sector. While the pandemic triggered a massive increase in hiring in the Tech industry, the stabilization of the industry has led to a period of consolidation and layoffs. Despite these challenging times, the Tech sector will continue to be a key player in the global economy and a driving force for innovation and progress. Experts remain confident that India will see a relatively limited impact from these layoffs, thanks to its robust Tech sector and the expectations that global giants will look to move cut jobs to more cost-effective locations like India.
If you have been impacted by job cuts in the Tech sector and would like to discuss your career you can reach out to myself at firstname.lastname@example.org or find your key contact globally here. I would also like to highlight my colleague in the US Shagun Sharma’s article; From Stress to Success: Coping with Layoff Anxiety.