Crisis in IT Sector


Forum for IT Employees (FITE) organized a two-day workshop on 17lh and 18th of June, themed 'The Present Crisis in the IT Industry and the Way Forward'. Apart from IT workers in Chennai, members of FITE West Bengal Chapter, trade union leaders, academics studying the sector, and labour activists participated in the two-day conference. During the conference the delegates discussed the neo-liberal foundation for the present crisis, while recognizing the role of emerging technological disruptions in shaping the present crisis in Indian IT sector. They also highlighted the particular conditions existing in India, such as the caste and gender based discrimination, the lack of protection for workers and poor quality education as key reasons for the problems that IT workers face. At the end of the two-day conference the delegates passed a series of resolutions demanding that the government enact and implement policies that protect workers in the IT Sector. The public meeting on 18th June was addressed by Justice (retd) Hariparantham, Sanjay Singhvi (TUCI) and C P Krishnan (BEFl) and Chidambaranathan (DTUC).

The two-day conference began with a briefing by Parimala, the president of FITE. Her opening statement touched on various aspects of the broad history of the IT industry that currently employs over 40 lakh people as direct employees all over the globe. She spoke about the separation of hardware and software by IBM to the founding of Tata Consultancy Services in 1974 to the huge boom for India that came with Y2K. With the separation of hardware and software development, outsourcing was possible and since the 1970s, the United States has been the de facto market for Indian IT service. With software development picking up in the 1990s, the US was the source of 60% of India's IT business. India's big jump happened when a big chunk of the estimated 600 billion dollars that went to deal with the Y2K scare came to the country. The period after 2000 has been a kind of golden age for the sector with whole cities being built around it. But with the recession of 2008, things are changing all around. Pre-2008, the industry was slated to grow at 20-30% but after the recession, growth has been limited to 10%. Employment growth has also shrunk from 20% to about 6%.

India also faces increased competition from countries in Latin America, Africa and South-East Asia. Automation threatens to permanently eliminate the need for 10-15% of jobs currently available in the industry. These entry-level jobs which are usually around software testing will be the first to go. Simultaneously, the managerial jobs associated with these tasks will also disappear. The industry has decoupled employee headcount and revenue so future revenue growth need not be accompanied with further hiring. Recent NASSCOM and ASSOCHAM reports hint at 25% of the IT workforce being under threat. This might be up to 10 lakh people according to some estimates. India's IT Minister has described it as the 'usual cleanup process', saying only 0.5-3% of the workforce need worry. But IT sector employees are already seeing writing on the wall.

Vol. 50, No.2, Jul 16 - 22, 2017