There has been a deluge of conflicting information in the media with respect to the job market and employment trends. News of large-scale layoffs and an impending recession is offset by reports of a hiring boom followed by narratives around a talent crunch. This large-scale dissonance among industry spokespersons and news articles is the source of much confusion and anxiety. It is thus important to evaluate and understand the employment trends so that we can chart out a steady course of action for the future.
MAMAA Layoffs 2023
With the exclusion of Apple, all the other tech giants under the acronym MAMAA have announced layoffs in a bid to rationalize costs Vs profitability amid the changing macroeconomic environment. Google’s parent firm Alphabet announced layoffs of 12,000 people or 6 percent of the total workforce. In early January, e-commerce giant Amazon too announced its plan to lay off more than 18,000 people, or around one percent of its total workforce. These developments are the result of a need to correct the mass hiring over the past few years and thus may not be clear indicators of the economic climate. There is consensus among economists that these tech giants miscalculated the digital surge during the pandemic and are now recalibrating to accommodate the return to normalcy. This view is further substantiated by the fact that Apple and other tech employers such as Accenture Plc who did not add on large numbers during the pandemic have not announced any layoffs. On the contrary, these companies have been witnessing consistent growth in headcount over the past few years.
In India, various reports peg estimated 22,000-plus layoffs in the past 12-13 months, with the largest share belonging to the edtech, fintech, e-commerce, and affiliated tech platforms. The string of layoffs in these sectors can also be attributed to a recruitment overdrive induced by the pandemic-inspired boom for tech products and services. These companies are now under pressure to downsize based on the rationalization of demand.
Pandemic Recovery Triggers Hiring Boom
As restaurants, hospitals, nursing homes, and child-care centers return back to normalcy post the mayhem caused by the pandemic, they seek to hire new staff. Employers in the healthcare and education sectors alone account for 35% of all private sector jobs and are expected to offset the cuts announced by the tech giants which constitute a mere 5% of the job market. These gains indicate a positive outlook for employment. In the US, similar trends that indicate the strength of the labor market have compelled forecasters such as Goldman Sachs to re-evaluate their projections of an impending recession from 35% down to 25%.
Talent Crunch and Skill Deficit
As we seek to reconcile the current and future employment trends in India, we find that large-scale layoffs in some sectors and the subsequent hiring in others are a constituent part of the business cycle that is likely to have short-term implications provided other more serious concerns are prioritized. India’s ability to sail through the current slump is dependent on its ability to prioritize and pursue its agenda for creating more jobs, both in the public and the private sector in 2023 as a part of its long-term economic growth initiatives.
A major employment trend that has stormed the industry is a skill deficit or talent crunch. Organizations are finding it difficult to find people with the requisite skills to cater to the immediate and future needs of the business. This is primarily because there is a significant disconnect between higher education and industry-leading to a massive skill deficit that threatens to derail economic growth. It is important for the government and industry to work in tandem to provide solutions to this problem before it snowballs into one that impacts business development and growth.
The roll-out of 5G is expected to create a significant increase in demand for digitally skilled talent for 5G. According to a recent Telecom Sector Skill Council (TSSC) report, India will need around 22 million digitally skilled resources by 2025 to reap the full potential of 5G. Similarly, over 2 million jobs in AI, Cyber Security, and blockchain are expected to remain unfilled in 2023. The workplace is evolving so rapidly that 76% of the global workforce is not equipped with the requisite skills to function in the new digitally focused workplaces.
Skill Development is the Way Forward
Therefore, we need to put in place a system to develop these skills in our existing and future workforces by implementing upskilling and skill-development programs both in the public and private sectors. The recent budget announcements are indicative of a greater focus on skill development to create a ready pool of workers for employers and facilitate access to entrepreneurship schemes. Initiatives such as skilling in new age courses such as coding, AI, Robotics, 3D Printing, etc. along with the establishment of Skill India International Centre’s and the Unified Skill India Digital Platform are all steps in the right direction. In addition, we must embrace apprenticeship and digital apprenticeship programs as a way to bridge the skill deficit and create a future-ready skilled workforce.
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