October 18, 2023 The Indian tech industry has been sharply downsizing of its staff this year –a result of global slowdowns, and sharp reductions in anticipated contracts from Europe and the Americas. These factors are usually beyond its control.
TCS bucked the trend on October 15, announcing it plans to hire 40,000 in the 2024 financial year – but other tech bellwethers are known to have sharply reduced their intake, by about a third this year. The law of supply and demand dictates that less work on hand means less manpower needed. Rather than letting go of existing staff, most of these companies are cutting down on fresh hiring and campus recruitment.
What makes the current wave of downsizing a more serious concern in India, is the impact it is having at the other end of the job spectrum – in the large startup ecosystem. Here its lifeblood -- venture capital funding -- seems to have dipped to an all-time low. Since funding is instrumental to the growth of the startup ecosystem, the red flags are more pronounced here.
The business press has cited Venture Intelligence, a research service focused on private company financials, which found that total investments in the first half of 2023 in the startup sector was $3.8 billion, compared to $18.4 billion the previous year. This is said to have resulted in the loss of some 17,000 jobs.
These numbers are in the ballpark of what market consultants Redseer, found: that startup funding peaked at around $ 50 billion in the financial year 2022, but was down to $ 15 billion in FY23. “The most significant causes included the global increase in the cost of capital and interest rates and a decline in the value of technology stocks. The recession in developed markets such as the USA and Europe also dealt a blow”, writes Mohit Rana in a Redseer blog
Well-known unicorns like Unacademy, Swiggy and Meesho have cut jobs. Byju’s, a prominent edtech company, also downsized most of its divisions this year.
But there is hope: Rana adds that startups have substantially improved their profitability in FY22, with some 50% of unicorns expected to become profitable by 2027.
Other analysts suggest that some industries like Electric Vehicles (EVs) , climate and space technology are seemingly exempt from the current wave of downsizing
Meanwhile, there is a conspiracy theory floating around:
Is technology the culprit for the tech industry’s woes? Are new technologies like Generative AI, ChatGPT and Large Language Models (LLMs) slowly replacing humans in some tasks like coding.?
Putting this in perspective, Stanford Emeritus Professor Arogyaswamy Paulraj, inventor of the key wireless technology Multiple In, Multiple Out ( MIMO) and a seasoned observer of tech trends says in a communication to this correspondent: “While generative AI is a reality today, its ability to write code still needs to transform into production tools. I don’t believe large language models are affecting jobs. Yes, there are other productivity tools in software like Phytorch that automate code leading to low-level software jobs getting automated, and jobs are now moving to more creative functions like product definition.”
The writing on the wall is clear. Yes, some entry-level jobs are going away. Yes, venture capitals are playing safe. But you can still weather the storm if you tweak your tech competency into something that is more creative, impactful and sustainable.
And an event in Delhi today suggests that at the ‘deep’ end of technology, venture capitalists are still pinning their hopes on India: The TechSurge India summit, where Union IT Minister Ashwini Vaishnaw is scheduled to speak, is organised by US-headquartered Celesta Capital, which invests early in disruptive technologies and innovative businesses, the Quad Investors Network which empowers innovation in the US, India, Japan and Australia and by the Indo-US Business Council. “India is poised to become the next global hub for emerging and critical technologies”, say the organisers who plan on bringing. together leading voices in tech, government, and investment, to discuss India's generational opportunity -- its great potential as wellas the challenges that must be overcome to fulfill it.
So somewhere among the dark clouds of job losses and retrenchment looming over Indian tech sectors, a ray of hope for the future can be seen. Will it sustain? Time will tell.
This has appeared in Swarajya