When the pandemic wiped out jobs in nearly all Indian industries, the country’s $227 billion IT industry stood out as a bright spot.
Between March 31, 2020, and June 30, 2022, the combined employee headcount at India’s top five IT companies—Tata Consultancy Services, Infosys, Wipro, HCL Technologies, and Tech Mahindra—jumped 36% from 1.2 million to nearly 1.6 million, a report in the Indian Express notes.
“And with revenue per employee at Rs 34.5 lakh—the average for the big five during the year ended March 31, 2022—this is also a high-productivity industry that is able to pay reasonably good salaries,” the report said.
The pandemic accelerated digital adoption around the globe by five-to-ten years. The Indian tech industry, deemed an essential service right at the beginning of the Covid-19 outbreak, helped companies big and small go virtual during and after the crisis.
While the knee-jerk reaction was to downsize during the lockdown in the first three months, resulting in benching and layoffs, jobs quickly returned in bigger numbers. The companies won business globally as demand for all sorts of IT services—cloud, analytics, digital payments, cybersecurity, and more—spiked.
Most of the business for Indian IT comes from abroad, with the US accounting for almost 70% of it.
In the US alone, Indian IT companies added 1.6 million jobs and splurged $1.1 billion in STEM education in 2021, a report by trade body Nasscom said. They heavily invest in the north American market with lucrative dollar-paying clients because the returns are high.
However, this dependency on the global can be perilous, too. For instance, while India apparently has a 0% chance of going into a recession, for the US it is 40%. And the early signs are already showing: Outsourcing deals are still flowing in but bellwethers like Infosys are witnessing a decline in profitability.
Important markets like the UK and Europe, too, are facing a slowdown amid the Russia-Ukraine war.
Given the turmoil, India’s IT companies will likely struggle to keep costs down. As borders reopen, travel and visa expenses are rising. The near-7% drop this year in the rupee could undercut even lucrative deals. Besides, high attrition ensures that they can’t scrounge on salaries and other benefits.
The jury, therefore, is still out on the ripple effect on India’s jobs market.