Yesterday, a few students at CoreNetworkZ EdTech Solutions asked me about the recent layoffs by the IT giants.
As an EdTech company, this development does not come as a surprise to us; however, many students are eager to understand the underlying reasons behind it.
I felt it was prudent to write a detailed blog post and share it with our students to provide clarity on the matter.
I truly value the efforts of Hanna Maria, a Senior Reporter at CoreNetworkZ EdTech Solutions, who worked tirelessly to collect data and speak with IT professionals impacted by the recent layoffs.
What Is The Hidden Secret Behind the Recent Huge Layoffs by Tech Companies?
Let me start this section with a question asked by Rajeev Menon, a UPSC Prelims student at CoreNetworkZ EdTech Solutions.
He asked, "Is there a secret that CEOs of top IT companies are not telling about the huge workforce layoffs?"
I think he asked the right question.
Major players, including Tata Consultancy Services (TCS), Microsoft, Intel, Meta, and Panasonic, have announced significant workforce reductions, collectively impacting tens of thousands of employees.
Joseph Mattathil, a CCNA student from Cochin, asked, "Do these layoffs have anything to do with Trump's new policy of not hiring Indian Engineers?"
Industrial experts may partially agree with Joseph's question.
Is it because of their financial issues? The answer is no.
CoreNetworkZ EdTech Solutions' financial team confirmed that these companies are making more profits.
Yet, they are trimming their workforce.
Following the investigation led by Hanna Maria and her team, we identified five key factors that contributed to the recent wave of layoffs.
The primary reason is simple: they are investing all their profits into Artificial Intelligence (AI) development.
So, they need fewer human workers.
However, all these clever CEOs are purposefully avoiding the term AI from their statements. But we cannot blame AI entirely for this grim situation. There are four more reasons.
Five Reasons Behind the Recent IT Employees Layoffs
Here, I will outline the five key factors identified by Hanna Maria and her team in their investigation into the recent IT layoffs. In keeping with her request, the names of the interviewed professionals will be confidential.
Rise of Artificial Intelligence and Automation
Interviews with affected IT professionals suggest AI as the primary reason behind the latest IT Layoffs.
Kevin Thomas, a senior Software Developer, said, "I fear there is no future for Software Engineers. With the help of AI tools, anyone can generate code in a few seconds. No one is even concerned about the security risks associated with codes generated by some AI tools."
From code generation to customer support, AI tools are replacing repetitive tasks and reshaping job roles.
Ann, a former Intel employee, mentioned, "AI tools took our job. All the money and time I spent on my college seem like a huge waste now."
I cannot publish her surname in the report as a promise Hanna made to her.
A few more employees from other companies also shared Ann's view.
However, top-level management refused to accept it. I had to add this line because one top-level manager from TCS asked Hannh to mention it.
Skill Mismatch
One reason IT giants are laying off middle-level managers and team leaders is a skill mismatch.
An investigation by Hanna Maria confirmed this as a valid contributing factor.
Despite significant investments in employee training, many middle-level managers struggled to transition into new roles.
In an interview with Hanna Maria, a senior manager at TCS explained that the company had to let go of several middle-level employees in their forties due to resistance to change and a lack of adaptability.
He stated, “TCS trained over 550,000 employees in basic digital skills and 100,000 in advanced technologies.”
He also pointed out that many non-IT engineers currently hold key roles but lack a clear understanding of the latest IT trends.
He added, "Those who have not studied Computer Science as a major in their college are showing issues with transition."
To remain competitive in the evolving digital landscape, IT companies must prioritize specialized talent over maintaining large headcounts.
Post-Pandemic Overhiring & Cost Cutting
During the COVID-19 pandemic, IT companies hired numerous professionals to meet the surge in market demand. However, as the world gradually returned to normalcy, these firms found themselves with excess staff.
Ankit Singh, a director at a startup IT company in Bengaluru, stated, “Have you ever asked the salary of a mid-level employee, probably in their late 30s or early 40s? It is substantial, and top-level IT companies believe they can replace such employees with juniors aided by AI.”
Ankit worked with Infosys and CTS before.
According to Ankit, companies are attempting to cut costs by replacing highly paid senior engineers with junior staff. With the rise of AI tools, experience is becoming less relevant.
A junior programmer can now develop applications with a level of precision comparable to that of a senior programmer, provided they use the right AI tools.
Changing Performance Metrics
Hanna’s interviews with several software developers revealed that bench policies have become stricter, with performance expectations now higher than they were before the COVID-19 pandemic.
TCS introduced a new deployment policy limiting bench time to 35 business days per year. Employees must be billed for 225 working days annually, or risk losing promotions and employment.
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Global Economic Uncertainty and Trump's Policies
Let me recall the question asked by Joseph Mattathil. He asked how Trump's polices are affecting the Indian IT companies.
The fifth reason is the changing Global Economic situation.
The global economy is grappling with challenges stemming from geopolitical tensions, notably Trump’s ‘America First’ policies. Indian IT firms, which remain heavily dependent on U.S clients, are particularly exposed to these disruptions.
I believe the readers of CoreNetworkZ EdTech Solutions will find this article helpful. Once again, I appreciate Hanna and her team for collecting the feedback from the affected IT employees.
Author: Alex George
Alex George is the Chief Editor and founder of CoreNetworkZ EdTech Solutions. He is a software engineer and has 20 years of experience in the EdTech niche.
You can contact him at alex.george@corenetworkz.com.
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