GLOBAL LAYOFFS 

2. Key points

• According to a global placement and coaching firm, the layoffs crossed 60, 000 in September and October.
• These developments are bound to have an impact on India's export prospects, especially in the information technology sector.

3. Layoffs becoming common

• Alphabet CEO Sundar Pichai had warned of a coming winter in the tech sector earlier this year.
• Staff queries on budget cuts did not get to choose the macroeconomic conditions always.
• A potential economic recession is a big red flag.
• With inflation soaring in most parts of the world, central banks have been scrambling since March this year to rein it in by increasing rates to make it more costly to borrow and consume. This will eventually affect economic growth and jobs.

3.1 Conference Board Survey

• The Conference Board measure of CEO confidence showed top honchos in the West haven't been this downbeat since the 2007-09 recession.
• The Survey asked 136 CEOs what economic conditions they are preparing to face over the next 12-18 months.
• An overwhelming majority 98 per cent said they were preparing for a U.S. recession: while 99 per cent said they were preparing for an EU recession.

4. Outlook for the Indian IT industry

• The Indian IT services firms are among the largest employers in the organised sector and any global economic trend is bound to have an impact on their growth projections.
• Managers look at headcount numbers critically when they want to cut costs and protect profit margins as they are accountable to investors.
• Though there is not a discernible trend yet, there are a few signs which may signal what is to be expected in the next few months.
• All top companies except Wipro saw a rise in revenue and net profit.
• Wipro's net profit slid 9 per cent from a year earlier for the quarter that ended September.

5. Start-ups

• News of layoffs in the Indian start-up front is predominantly in EDtech or the educational technology front.
• A lesser share of internet users visiting educational websites since the decline of the pandemic is cited as one reason.
• The Indian start-up layoff tracker by Inc42 showed that more than 15, 700 employees had been laid off in 2002 given tightening funding conditions.
• The tracker showed that the tech sector has laid off the most employees-14 start-ups had laid off 6, 900 employees in 2022.

6. The situation in the U.S.

• When layoffs take place in some parts of the U.S. economy, job additions also take place simultaneously in other parts.
• In the U.S. as per the Bureau of Labor Statistics data, as of November 4, employment in healthcare saw the healthiest increase at 53, 000.
• Manufacturing added 32, 000 jobs.
• Despite the U.S. heading into the holiday shopping season, October saw only moderate gains in retail job additions of 7, 000.
• For Indian IT firms, roughly about one-third of revenue comes from financial services over the past six months, this sector has seen little change in terms of job additions in the U.S. economy.

7. Impact on India during the earlier global recession

• During earlier global recessions, while companies seldom publicly announced layoffs, they would all look to ease out staff who were lower down the performance ladder.
• Companies that were in a particularly bad patch cut bench strength.
• Then again, if a person was about a month old on the bench (i.e., without projects) he or she may have been asked to sign up for some training courses etc.
• If the professional spent more than three months on the bench and had not landed a project, the system itself would ease him or her out.
•  the aftermath of the 2008 recession stretched well beyond 2-3 years and companies would start slowing down headcount addition.
• Planned additions from campus would decline or offers would be made but absorption into the company could well take 9-12 months from the time of offer.

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