Prolonged lockdown may lead to job cuts in IT industry: Ex Nasscom chief

Chandrasekhar said the work-from-home systems being adopted by several firms across the globe may have a negative impact on the industry in the short-term

India's information technology services sector is facing an adverse impact on the operational front following the outbreak of coronovirus.

Indicating that a prolonged lockdown to contain the spread of Covid-19 may lead to job cuts in the Indian IT industry, Nasscom's former president R Chandrashekhar said that the work-from-home culture may become a positive development in the long run as it opens up newer avenues and saves investments by IT firms.

The former bureaucrat also said startups which are surviving on funds infused by venture capitalists may face tougher situations if the present scenario deteriorates.

"The larger companies may not be actually cutting jobs for two reasons.

One is that they do not want to lose their employees and they have money to pay.

Many of them ( big companies), even if they do shed some jobs it might be at the most people who are on temporary or intern type and all. But they would not want regular and permanent employees to go. So as long as they have sufficient flexibility in their books, they would continue.

But beyond a point that it goes on, for let us say, two months or three months, then even for them, they will feel the pressure. They may not just keep on providing subsidies to the employees.

So the key question will be how long that goes on, Chandrasekhar told PTI.

He said the work-from-home systems being adopted by several firms across the globe, including India, may have a negative impact on the industry in the short-term, but in the long run it would change the work culture which hitherto was not experienced by many of the IT firms in India.

According to him, the work-from-home, in the long run results in savings in terms of employee productivity, logistics cost and office space.

He said client companies offering contracts to Indian IT firms, which are also undergoing similar experiences, may not object to work remotely.

"Human behaviour (adapting work-from-home culture) changing is not easy.

This coronavirus has forced us to change faster than we were changing, Chandrashekhar said.

On impact of the prolonged lockdown on startups, he said it would be a big challenge for the budding enterprises as the investments they get are based on their ideas and future revenues and the present situation under which peoples movement is curbed may shackle their progress.

"Where will they (startups) get money to pay salaries to their employees.

Venture capital investors would not pay the money or invest their money to pay salaries because they are not in the charity business.

If the employees are not paid and if they leave and it is difficult for the startup againto come up. So the whole investment plan goes for a toss, he said.

Founder of a mid-sized IT firm said the job cut in the IT industry is inevitable even for bigger firms if the present situation across the globe continues for a few more months.

Former chairman of Nasscom , B V R Mohan Reddy said a clear picture as to what is going to happen has not yet emerged as the situation with all respects is still evolving.

Reddy said there will be a demand shrinkage for the IT industry as the entire world is under stress.

"There is no economy in this world that is going to do well in this situation.

All of them are in some form of stress. So, therefore, there will be a demand shrinkage, he said, indicating tougher times of the industry ahead.

Growth a big challenge for India IT industry in 2020-21

With business of most of its clients getting impacted by the coronavirus outbreak, growth for India's IT services sector is going to be a big challenge in the coming fiscal, an industry veteran said on Wednesday.

There will be impact on Indian Information Technology industry for multiple reasons, former Chief Financial Officer of Infosys Ltd V Balakrishnan said

With restriction on movement of people following the scare, Indian IT companies' ability to deliver services on-site could get severely impacted but that could be addressed to some extent by working remotely, he said.

According to Balakrishnan, global markets such as the US, Europe and Japan are already witnessing significant slowdown in economic growth.

"That will have significant impact on spending. I think next year, the growth for Indian IT services industry is going to be a big challenge," he said.