The past few months have been difficult for people working in the private sector in India, particularly for employees of tech companies. It’s not just the startups that are laying off people, but also storied IT services organisations. Illustration: Chaitanya SurpurW
hen social media platform Twitter was firing hundreds of employees in India as part of the global layoffs initiated by its new owner Elon Musk earlier this month, Tarun Shah (name changed), an employee with an AI startup, was also handed the pink slip. The startup had suspended its India operations overnight.
Shah became another statistic along with the 16,000-odd employees working in tech companies in startups who have lost their jobs this year as part of mass—and in many cases, sudden—layoffs announced by their respective companies.
Shah says his company gave him no advance notice, the leadership held no meetings or town-halls with employees, and there was just an email and a call from HR saying they had been relieved from their duties with a few weeks of severance, and were not required to come to work from the next day.
“When things are going good, companies call employees their family. But this culture changes as soon as things are not going good,” says Shah, 25, who is an engineer with a degree in computer science. “Job security, even for skilled employees in the supposedly fail-safe tech sector, seems like a joke these days. All jobs come with a certain element of risk,” he says, adding that now he is in the process of applying to tens of companies and giving interviews on a daily basis. People on social media—who have been offering their support to people affected by layoffs—have been helping him with multiple job leads. But now, the way Shah approaches a prospective employer has changed.
While earlier he used to prioritise the role and take a company’s promises about the job and their work culture at face value, now he questions them a lot more. “I not only look at their product, but also their financials. If am not convinced about the stability of a company, that’s a no-no for me,” says Shah, who explains that after his layoff experience, he has started prioritising his personal security and growth above all else.
The past few months have been difficult for people working in the private sector in India, particularly for employees of tech companies. It’s not just the startups that are laying off people, but also storied IT services organisations. While global job cuts at companies like Twitter and Meta have affected their Indian employees, even startups with unicorn status (valued at $1 billion or more), including Byju’s Unacademy, Meesho, Ola, Blinkit, Cars24 and others, have laid off thousands of people in their workforce.
Experts say that companies saw a huge upsurge in funding and thereby, hiring, due to the move towards digitisation during the Covid pandemic, which they are unable to sustain now due to the funding winter and lowered demand from customers. Hence, employers are forced to re-adjust their cost structures to the available demand, says Manish Sabharwal, vice chairman, TeamLease Services.Also read: Meta to layoff 11,000 employees, 13 percent of its workforce
The reasons for layoffs—or retrenchments—are usually corporate restructuring, cost-cutting measures to reduce excessive workforce or redundancies due to job eliminations, adds Pooja Ramchandani, partner, employment law at Shardul Amarchand Mangaldas. According to her, retrenchments have always been part and parcel of the functioning of companies across sectors.
Under such circumstances, it is important for employees at the receiving end to take care of their mental, social and financial security, says Aditya Narayan Mishra, CEO, CIEL HR Services. Theoretically, employees understand that taking up any employment is a risk, but they do not typically plan how to tackle that risk, he explains, adding that it also becomes difficult when companies do not practise a humane way of letting people go, and do not offer post-layoff assistance to employees to take care of their financial or emotional well-being.
Mishra has three main strategies for employees who have been laid off. First is to deal with it practically, rather than emotionally. Second is to start making a list of potential employers, research about available opportunities and companies, look for avenues to upskill and even diversify into other sectors if required. Third is to approach employers while being mentally prepared to describe their situation while pitching their candidature. It is also important to network–with friends, ex-bosses and colleagues. Mishra suggests maintaining connects with the company that fired you and former colleagues, and ask them to help you with leads, because often it is your colleagues who can vouch for your capabilities to a new employer.
The current wave of layoffs has particularly seen support networks and communities of people being formed on social media, which help employees who have been laid off in a variety of ways: From helping them negotiate severance to finding new job leads to expressing criticism towards companies that have fired people unceremoniously or without following due protocol.
One such digital community is BeBetterAgain, which was formed by Gagandeep Singh in April after many of his colleagues lost their jobs at Better, a US-based digital-first home ownership company. Singh started forming WhatsApp groups of people who have been laid off—at present, he claims there are four WhatsApp groups of about 250 people each—while reaching out to companies asking them if they have job vacancies. Once a vacancy opens up, he circulates a Google Form in the groups, asking those looking for jobs to fill the form. He then shares the forms with their recruiter, who then contacts them directly.Also read: The comeback is stronger than the setback: Byju's founder to employees
Since April, he has connected people to over 100 companies, he claims. He says some of the companies where he has placed people include edtech firm Classplus, medical tech company Smith + Nephew and fintech company Arth Digital. According to him, being laid off creates a crisis of confidence among people, but due to increasing awareness about layoffs, the stigma attached to it has reduced.
“With more bellwethers and marquees carrying out layoffs, the erstwhile taboo about a laid off employee has vanished, agrees Kamal Karanth, co-founder of specialist staffing company Xpheno. As layoffs are understood and acknowledged as a necessity during unprecedented business conditions, they do not restrict an employee’s choice for the next job. “While layoffs are a disruption of an employee’s rhythm, it’s not the end of the song for anyone,” he says.
Mishra agrees, adding that as per data analysed by his company, 40 percent laid-off employees on an average find a job within a month’s time, while 80 percent of them find a job within three or four months. “Of course, this depends on a lot of variables like one’s skill, sector, years of experience, compensation levels, and expectations,” he explains. Even though there is a 15-20 percent slowdown in hiring in the tech sector, people with skills that are high in demand, like full-stack development, AI/ML skills, cloud architect etc. can get a job quicker than many others, he says. According to Mishra, people who have been laid off need to be more flexible with their options and expectations and “not take the layoff personally”.
Not taking such a setback personally is easier said than done, says Sharvaani S, a content marketing manager who faced three job losses since 2020 in the wake of the Covid-19 pandemic. While she received severance in all cases that were cost cutting (she says), she lost another job as the company winded up its operations. “I started questioning myself, asking if there is a problem with my talent or performance. I was gaslit into believing that my performance was not up to the mark. It took me a long time, and hours of therapy, to not take a layoff as a reflection of my capabilities," she says.
The most important thing, according to her, is that the company maintain full transparency and clear communication with why employees are being laid off, and help them move on as smoothly as possible. Having an emergency fund, insurance, and saving regularly helped her during this time, she says. Mishra adds that banks can also offer a moratorium on loans for laid off employees.
Karanth explains that employees must have a strong personal plan for response. A careful reading through of the terms of employment and awareness of the company policies is critical, and employees need to be able to see and hear the reasoning behind a layoff decision.
What the Law Says
Ramchandani of Shardul Amarchand Mangaldas explains that from a statute perspective, layoffs are when an employee is temporarily asked not to work and is given a subsistence allowance, but doesn’t necessarily mean termination. While the term layoff is used in general parlance, “termination of employment on account of redundancies etc. is defined as retrenchment under labour laws”.
Labour economist KR Shyam Sundar says that the Industrial Disputes Act, 1947, is tilted towards conventional sectors like registered manufacturing and largely covers workers who are not in managerial or supervisory roles, but not service sectors like IT, which were new and underdeveloped when these laws were drafted. “So hire and fire at whim continues to happen in these sectors. This is a serious lacuna that should have been tackled in the new industrial relations code, but neither trade unions nor policy makers have paid attention to it.”
The UK and Europe have been seeing the unionisation of tech sector employees in order to help people with issues such as salary bargaining rights and unceremonious firing. In India, unionising has been largely elusive in the tech sector. Sundar, a professor at XLRI, Xavier School of Management in Jamshedpur, says the impression among companies and investors is that having unions works against the tenets of attracting capital and scaling up.
Among IT employees, unionising is often seen as communist. “IT employees feel that unionising lowers their status. The white-or-gold-collar tag is a social aspiration, and they want to stick to that image,” says Sundar.
Employees having a union, according to him, need not be an anomaly in capitalism, and if done right can help foster transparency and better governance in companies. “Changing realities like the ongoing layoffs and disruptive technologies and automation taking away jobs, could actually provide an impetus to unionism. It’s already happening in the West,” he says.Also read: Netflix lays off 300 more employees
When edtech startup Byju’s decided to lay off about 170 employees and shut down operations in Thiruvananthapuram, Kerala, in late October, employees alleged they were forced to resign without prior intimation and took the matter up with state labour minister V Sivankutty, as per media reports. A few days later, Byju’s reversed its decision to shut down operations in Thiruvananthapuram.
That said, Manish Sabharwal, vice-president of TeamLease Services, believes that we cannot have a modern economy with a socialist or pre-modern definitions of employers. According to him, people getting and leaving jobs, and companies hiring and firing, is going to be a normal thing in the modern economy. “I don’t think you can have the upside of the funding cycles without the downside of the funding cycles,” he says.
When the first list of Fortune 500 companies came out in 1955, the life expectancy of Fortune 500 companies was around 64 years, and now is it close to 15 years, Sabharwal explains. At the same time, the average life expectancy of people in India is close to 70 years. “Companies don’t live forever. What is the value of a pension promise from a company that is only going to live 15 years? It’s a promise it can’t fulfil,” he says.
Gone are the days, according to him, that employees can think of spending their entire career in one or two companies. “Employees need to prioritise lifelong learning, develop personal learning plans to handle these changes, be practical about their expectations, about the risk they take [with an employment] and how they take it,” Sabharwal says. “Obviously, social security nests need to be devised to help people handle transitions like layoffs. But the safety net should not become a hammock.”
Enterprises should have a rehearsed playbook and documented modus operandi for planning, announcing, executing and managing layoffs, says Karanth. This playbook, according to him, should cover aspects of timing, internal communication, employee support, severance plans, outplacement assistance, PR management and overall transparency. “Layoffs announced without a comprehensive plan and preparation can misfire as seen in some recent cases. The cornerstone of the enterprise layoff plan is welfare of employees, and this should be articulated consistently both in word and action,” he says. “While a layoff is a hard blow on the employee, the enterprise should do all it can to soften the blow.”