Syllabus: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
Current Crisis
- IT sector employs only ~1% workforce but contributes ~7% of GDP; symbol of upward mobility.
- TCS announced steepest-ever layoffs: nearly 20,000 jobs shed in single quarter showing structural change.
- Over 50,000 IT jobs may be lost by fiscal year end through ‘silent layoffs’ — performance exits, delayed promotions.
Reasons for Transformation
- AI-Driven Automation
- AI reshaping IT work: routine tasks (reporting, coordination, basic coding) increasingly handled by algorithms.
- Agentic AI (autonomous systems) disrupting IT services by automating routine work, improving developer productivity drastically.
- Policy and Economic Factors
- US immigration policies more restrictive; H-1B visa fee hike prompting Indian firms to localize overseas workforce.
- Client budgets tightening in US/Europe due to economic uncertainty leading to cautious IT spending globally.
- Outsourcing model relying on scale/cost arbitrage replaced by specialized expertise, lean teams, AI fluency.
- Skill Mismatch
- Digital assembly line model obsolete: clients want solutions (cloud-native, cybersecurity, generative AI), not armies of coders.
- Mid-career professionals promoted for managerial ability now ill-equipped for new demands requiring technical depth.
- Legacy skills (SAP ECC, mainframes, non-cloud platforms) less relevant; AI can replicate these skills.
Way Forward
- Upskilling
- AI upskilling on large scale: TCS upskilled 550,000 employees in basic AI, 100,000 in advanced; must become norm.
- Public-private partnerships can accelerate upskilling efforts ensuring workforce readiness for AI age.
- Curriculum Reform
- Engineering education must move beyond rote coding; courses in machine learning, ethics in AI, product thinking mainstream.
- Soft skills (communication, collaboration, critical thinking) equally vital for future IT professionals.
- Support Ecosystem
- Startup ecosystem needs government/VC support; India’s tech future lies in products, not just services.
- Supporting AI startups, deep-tech ventures, innovation hubs can create new jobs and diversify sector.
- Social Safety Nets
- Severance pay not enough: need career transition support, mental health resources, retraining subsidies for displaced workers.
- Government should require IT companies in mass layoffs to provide mandatory 6-9 months’ salary as compensation.
- Policy Leadership
- Global engagement ensuring visa access, data sovereignty, trade stability; protectionism abroad matched with policy clarity.
- Transition from manpower to mindpower, outsourcing to innovation, quantity to quality challenging but unavoidable.
Q- Suggest policy measures to cushion the impact of layoffs while promoting competitiveness in India’s IT sector. (10 marks)