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How will job cuts in the US tech companies be positive for Indian tech?

In the past three months (Apr-22 to Jun-22), several organisations have declared layoffs to cut expenses, as concerns of an impending recession are mounting high, due to a multitude of global factors. According to a thorough report released by Crunchbase, over 32,000 employees in Silicon Valley had been sacked as of July 2022 with numerous large tech firms such as Uber, Netflix, Shopify, Coinbase, Better, being a part of the list.

While there have been layoffs in India, too, their magnitude is fractional in comparison, with most of the layoffs restricted to loss leading startups. These include Edtech companies like Unacademy and BYJU'S as well as the ride-hailing company Ola. However, IT behemoths such as Infosys and TCS are still hiring in record numbers at all levels, which makes us ask the question, “what recession?”

The Indian point of view

Although the layoffs are taking place owing to the upheaval of economies worldwide due to one blow after the other from unprecedented events like the pandemic, the Ukraine and Russia war, etc., There seems to be a silver lining for India’s tech industry in the long run.

Indian tech companies have been battling a high attrition rate for a while now which means that these companies have had to invest more time and money in searching for talent, onboarding them and training them for their roles. Reasons for this high attrition included:

• Rival companies willing to pay high salaries for top talent in areas with high demand such as data science, cloud computing and AI/ML.
• Opportunities to go abroad for further education which eventually leads to career paths in the same country.

Also Read about IT sector takes the lead in 2023.

Benifits to India from Job cut

1. Reverse brain drain:

This talent, which left the country in their early years, tends to find a way back to the country and occupy senior roles at various top tier IT firms. They bring back a world of experience and expertise, which only benefits the entire tech ecosystem on a macro level. It also encourages young people to remain at these firms, as they can learn from industry leaders, while remining at their firms. 

2. Deferral of plans to move aborad:

If job prospects look weak in a country, why would anyone want to move there, right? A combination of job cuts, weaker rupee and rising interest rates means that moving abroad suddenly becomes a lot riskier (not to mention expensive!). With job prospects hinging on everchanging visa rules, coupled with Indian companies offering good salary hikes, some people end up deferring their plans to migrate, which benefits the tech ecosystem in the short term. 

3. Startup boom in India:

It is no surprise that India is destination of choice for all PE / VC investments due to a variety of factors – rising middle class, increasing earning potential, rising disposable income, etc. In fact, 2021 was a record year in terms of inflows with $36 Bn flowing into the Indian economy. With cuts in jobs in the US, this talent is greatly valued by these startups, as they bring their expertise and be an integral part of its growth story. 

4. Education rethink:

When you learn about highly educated folks at top firms getting the sack, it makes you question your own education choices, doesn’t it? In a world which values skills more than degrees, the focus shifts to upskilling, which can be done from anywhere. So why spend hundreds of thousands of dollars on a degree, when the same skills are available on your laptop, for a fraction of the cost?

In a nutshell, US job cuts will decrease the opportunities available for Indian talent abroad, thus reducing the brain drain from the country. This will help to harness their potential within the country and make Indian businesses more innovative, universities more developed and the country as a whole richer in skilled and competent human capital.

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