- May 16 2017
India's information technology sector is, more than anything else, a source of national pride. It plays into our conception of ourselves as a high-tech nation. As Narendra Modi would say — sorry, actually did say — "Information Technology + Indian Talent = India Tomorrow".
The truth is, however, that we have created a slow and lazy IT sector, which invests too little in itself, in its people, and in the future. This is being sharply brought home to us now by the news that layoffs in the sector might, over the next three years, be in the hundreds of thousands. Now, remember, this is a large number; but layoffs of two to three per cent of the total workforce of a sector in a year are not the deepest sort of crisis.
Yet there are good reasons to suppose that these layoffs will only be the tip of the iceberg. If you don't believe me, listen to Vishal Sikka. The man who runs Infosys has said — in, presumably an unguarded moment that he did not run by his company's PR flacks — that over half, perhaps even three-fourths, of jobs in Indian IT are under threat. And it isn't just Trump who will be responsible for this. Technological change will account for much of it, as jobs that are relatively low-skilled and repetitive will be automated.
Today, the layoffs appear limited to those who got below-average performance ratings from their companies. Many of the stories being shared on social media show how very arbitrary those ratings can be, a product of which projects you wind up being assigned to, and the whims of your supervisors. But in the very near future, it may not even matter what your performance rating is — the jobs that you have been prepared to do might no longer exist.
That India's IT sector and the lakhs of young people who depend on it for their futures are in this position is a product of how poorly most Indian companies have prepared for the future. They have simply failed to recognise the demise of their business model. That the climate in the US has turned against them should also have been eminently predictable. Too many of these companies, treated like heroes in India, have had no compunction in gaming the visa system in the US. They have treated this exploitation of loopholes as their right. Meanwhile, the employees who are sent to client locations on their behalf have never been given the same opportunities as their equivalents in American companies doing the same job — let alone the same salaries. After this sort of behaviour, is it any surprise that the US wants to crack down? It is not Trump alone who wants to do this — cracking down on the H1B system is a bipartisan preoccupation in Washington. Democrats including Bernie Sanders have also signed letters on the subject to past administrations. That in itself should have warned Indian companies that they need to invest in lobbying efforts in Washington, and in cleaning up their own act. Instead, they sat around and hoped for the best.
Their reaction to the coming artificial intelligence revolution has featured the same sort of laziness and ostrich-like denial. Some have half-heartedly talked of digital products and services and so on. But they do not seem to realise that creating that sort of ecosystem will mean supporting much stronger innovation at home, including in the workplace. This will mean better and stronger intellectual property rights — and a system of norms that respects those rights. But IPR has never been a priority for Indian IT, which has benefited from weak provisions.
Meanwhile, many companies have failed to see that their employees are valuable resources instead of simple cash cows. A system based on labour wage arbitrage — paying people as poorly as possible in order to keep costs low — may have had its advantages when the sector was small and growing, but has run, now, into its limits. Companies should long ago have started investing in their employees, allowing and encouraging them to challenge themselves and to upgrade their skills instead of seeing that as a threat. The stories being shared on social media today make it clear how poor the human resources practices are of many Indian IT companies. They simply do not believe in the importance of training and retraining an employee, or of ensuring that that employee is receiving the widest possible exposure, experience, and opportunity to innovate. Yet, only through such practices will companies be able to move up the value chain — and, therefore, survive in the new age of machine learning and AI.
For decades, being a software engineer in an Indian IT giant was considered not just a good job, but a source of pride, a participation in nation-building — the way working for a public sector engineering giant was treated in an earlier era. It is now clear how mistaken that impression was. Indian IT companies never deserved the exalted position they were given in our public mythology. Unless they change their ways, they will die a deserved death. Hopefully a more innovative, dynamic and fairer sector will emerge from the ashes.
This commentary originally appeared in NDTV.