News of layoffs can be emotionally shattering, evoking self-doubt and a flood of devastating thoughts. After being laid off, employees often find their career expectations replaced by uncertainties about the future. The fear of financial crisis is also strongly associated with the term ‘layoff’.
However, layoffs have the potential to reshape the economic, political, and social fabric of affected economies, creating ripple effects that cannot be overlooked. Workforce reductions occur for various reasons, including economic slowdowns, increased automation, company restructuring, and reduced discretionary spending. Some experts believe that the current decrease in employment is also due to over-hiring during the COVID-19 boom and the subsequent decline in industry demand. Companies hired many workers during the pandemic, anticipating it to be the new norm, but as demand contracts, they are now cutting back. Automation and restructuring also enable companies to operate with fewer employees. This combination of factors is leading to significant headcount reductions across various industries.
The years 2022-23 saw a large number of layoffs by both big and small companies. This trend continues in 2024, with 60,000 job cuts already reported by 254 companies, according to the independent layoff tracker Layoffs.fyi. Major IT firms like Microsoft, Google, Amazon, Tesla, and TikTok have laid off a significant portion of their workforce in January 2024. Smaller startups have also been forced to lay off employees, and in extreme cases, some have had to shut down operations entirely.
Both large and small companies are increasingly incorporating Generative AI into their operations to create more efficient and faster solutions and services. While firms have the right to adopt the latest technologies to meet business demands and minimize costs, the human aspect of these decisions cannot be ignored. The impact of automation on jobs previously considered safe remains a critical concern.
Lay Off List
In January 2024, 19,350 employees were laid off, followed by 15,589 in February and 7,403 in March. In April, a total of 22,153 workers lost their jobs, and in May, another 9,882 employees were terminated.
So far in the current month of June, over 4,000 employees have been fired, and many organizations are planning significant reductions in their workforce. Unit is planning to lay off 15% of its workforce, Loop has announced more layoffs on LinkedIn, and Paytm is conducting extensive job cuts across the company, though the exact number is currently unknown. Microsoft has cut hundreds of staff from its Azure cloud business, and Google is implementing large-scale layoffs globally within its Cloud teams. Ginkgo Bioworks plans to cut more jobs after terminating 158 employees. Meanwhile, Running Tide has laid off its remaining employees and completely shut down operations, despite raising over $50 million in funds since 2017.
Why Lay Offs
During the COVID-19 pandemic years, the market marked a staggering move towards online services, making tech companies believe it is the future. As a result, they indulged in a hiring frenzy to meet up to the demands of that time. Post-pandemic, the entire landscape changed, requiring companies to adjust to the new reality. The reasons for this shift are numerous, including some of the following:
1. Slow Economic Growth: When economic growth is slow, businesses may not expand or hire new employees, leading to a lack of new job creation and a higher unemployment rate. Consequently, economic stagnation directly impacts the job market and employment levels.
2. Skill Mismatch: In a situation, where workers' skills don't match what employers are looking for, it becomes hard for them to find jobs, even if there are openings. This gap between workforce skills and job requirements leads to more people being unemployed.
3. Structural Issues: India’s strict labour law may be the reason companies find it difficult to expand their workforce due to the difficulty in adjusting it later, which can affect job growth and stability in the market.
4. Cyclical Factors: Employment levels and vastly affected by economic cycles. During downturns or recessions, companies often lay off workers to reduce costs and stay profitable.
5. Automation and Technological Innovation: While these advancements increase efficiency and productivity, they also lead to job displacement as machines and software take over routine tasks.
6. Pandemic Impact: The pandemic caused by Corona coronavirus has significantly impacted the Indian economy, causing widespread job cuts and layoffs across jobs from various sectors.
Growing Trend of Silent Layoff
Nowadays, ‘silent layoff’ or ‘quiet layoff’ is a new trend in vogue. It is a situation created by companies to reduce their workforce without directly laying employees off the job. In this scenario, companies don’t announce mass layoffs publicly. Rather they reduce the working hours, reassign roles, and conduct interviews for inter-departmental shuffle. This silent layoff trend is increasingly being adopted across verticals but is more prevalent in the IT services industry.
Companies need to reskill, upskill their existing workforce
Of all the regions affected by the global economic changes, India has seen a significant number of layoffs. Employee layoffs in India have become a major concern, particularly due to economic challenges such as structural disadvantages and rapid technological advancements. No sector has been spared from the worst impacts, leading to widespread job insecurity and financial instability.
While some layoffs are inevitable due to economic cycles and the need for businesses to adapt, it is crucial for companies to manage this process transparently and responsibly. While some of the companies have begun to invest in reskilling and upskilling their people for the technologies in demand, it is critical for employers to create a pool of skilled workforce by regularly training their existing people. It will save them the trouble of searching for talent outside which can be both time-consuming and a costly affair. Providing support and training opportunities for affected employees to adapt to technological changes can help mitigate the negative effects. Ultimately, balancing business needs with employee welfare is essential for sustainable economic growth and social stability in India.
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