Undergoing Change: How Tech Layoffs Are Transforming The Job Market

Recent months have seen a flurry of headlines announcing massive layoffs in the tech industry — sparking fear, uncertainty, and disruption for those affected.

Started by the Big Tech companies laying off thousands of employees globally mid-2022, the ripple effect soon reached India, with over 130,000 employees already out of their jobs until now.

While the cloud of layoffs is yet to completely pass, and no one can definitively predict when it will– there is a palpable concern among employers and employees to know how the job market in India will shape up in 2023 amid these unprecedented times. Taggd has addressed these concerns in the latest report of Decoding Jobs 2023 which navigates the job market in India 2023.

The scale of the layoffs is at a level that is reminiscent of the unforgettable 2001 and 2008 layoffs. While the situation is grim, the trends do not indicate that it will turn out like those two periods. However, the impact of the layoffs will bring out several changes in the job market.

1. No rapid hiring: The quick-scale hiring approach that leading IT firms adopted during the pandemic to meet the rapid surge in client-side demand is a trend whose time is up. The demand curve has almost flattened and companies are spending every penny after careful consideration. Hiring in 2023 will be the old school way– calculative and for the long run.
2. From an employee to employers market: The heightened demand-supply gap during the past few years (amid a growing economy) had shifted the hiring advantage in favor of employees. However, the slew of layoffs and a relatively weak economy has shifted the balance of power in favor of employers.
3. Expansion of talent pool: The sudden layoffs have flooded the talent pool with skilled tech talent, several highly trained too, which will help reduce the demand-supply gap, and help find high-quality talent more easily. However, the availability of highly trained employees in niche skills like AI/ML/DevOps continues to remain a challenge.
4. Non-tech companies to emerge as potential tech employers: The rising focus on digitalizing process flows coupled with a growing demand for IT functions in conventionally non-tech sectors like automobiles, telecom, BFSI, and manufacturing, will see non-tech companies emerging as potential high-value employers of tech talent.
5. Realignment of talent pipelines for tech companies: Fundamentally sound tech companies will see 2023 as the right time to capitalize their strong cash flows to realign their talent pipeline for the long run with highly trained skilled talent without facing intense pressures of market cannibalization.
6. Replacement hiring: Talent, especially at the mid and senior levels, will face the pressure of being replaced with lower cost new hires from the suddenly large talent pool hungry for jobs, or with internal entry-level hires that the company has nurtured at more competitive compensations.

India continues to remain the fastest-growing economy globally, and is set to buck the overall bleak hiring trend indicated by most economies for 2023. The government’s strong focus on encouraging FDI and building India as the global business hub is panning out positively, and 4 out of 10 employers in India expect to see a 20% uptick in hiring in the coming year, with 7 in 10 IT companies expected to increase their workforce in Q1 2023.

2022 was a year of correction and rationalizations, and the job market will grow in a better direction in 2023 driven by a rising focus on employee wellness in terms of job flexibility, diversity, and wellness, and a rising demand for talents with skills in the field of AI, ML, DevOps, cloud computing, process engineering, and data analytics.

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