Growth of employment in IT sector dropped to 2.6 per cent over the last financial year compared to 6.7 per cent last year, said a CARE report on employment growth in organised sector this week. IT sector is the largest job provider in corporate India with 22.7 per cent of the employment pie.
Telecom fell from 3.6 per cent employment growth last year to a negative growth of 6.8 per cent. Telecom numbers, however, do not include employment contribution of Reliance Jio since it is not a listed company.
“IT business in India is linked to industry and service sector. Growth has been low in FY17, therefore we see this slowdown. Further, US economy has not taken off and hence the demand (for service) is lower. It could fall further next year if Trump’s policy pays off,” said Madan Sabnavis, Chief economist, CARE. He, however adds, that some demand in the domestic may pick up due to requirements in GST implementation going from the point of view of the regulatory requirements.
US president Donald Trump has been pushing industries to hire Americans instead of using H1B visas to hire foreign technical help. Infosys, TCS and Wipro among others have spiked up their hiring and media engagements across the country to portray a strong pro-American outlook.
In India, IT companies like Cognizant, Tech Mahindra, Wipro and Syntel have already been accused by former employees of sacking them citing performance issues.
“Overall telecom sector has been affected by severe competition as well as some business consolidation. Wherever similar organisations merge, there will be an overlap of roles,” he said. While the companies themselves have been denying the possibility of layoffs, it is unlikely that telecoms would retain similar job roles post consolidation.
Earlier this year, Tata Teleservices was in the news for allegedly firing almost 600 employees. According to industry sources, Aircel-Reliance Communication merger and Vodafone-Idea merger can cost anywhere between 10,000 to 30,000 job losses. Employee costs constitute about 30 per cent of total telecom revenues.
A survey by job portal Wisdomjobs earlier in the month had noted that attrition rates across IT and telecom stood at 24 per cent and 22 per cent respectively, which was higher than any other sector. However, due to the combined slowdown and uncertainty across the industry, voluntary attrition rates dropped by about 4 per cent.