IT Recession 2020


Nov, 11 2019

Recession Happening in the IT Sector

The Indian economy is hitting a rough patch, and there is a slowdown in the growth rate in the GDP of the economy. There has been a slip in the first quarterly of the FY20 and it has been the lowest in six years. There has also been a rising number of non-performing assets, sluggish consumer demand, failed manufacturing sector and they all have a role to play in the decreasing growth rate and the IT Recession in India

Recession is defined in economics as ‘three consecutive quarters of contraction in GDP’. In a developing nation like India, shrink or contraction is very rare for employment. The last negative growth for India was in 1979.

However, there has been a panic among the techies in Bangalore. Focusing more on the home-ground specifically on the IT Recession in Bangalore. The city is the silicon valley of India, the company Infosys is letting go of 10% of its workforce. That is 2,200 people (they have 30,092 employees), which include senior managers as well. They are the perceived fat particularly in the top and middle section, and this has been done to flatten the organization. The attrition rate for many employee have been from assistant vice presidents, senior presidents, executive vice presidents and management level to name a few.

The reason that such layoffs happen in big companies is that they are high-performance organizations, and involuntary attrition is a normal course of action. This is considered as mass-trimming across many levels. Considering these layoff there is constantly a need for employees to have complex skills. This leads to less staff needed to give traditional support services with an advance in automation. Therefore, IT Recession is a normal course of action for most multi-national companies.

It’s Time for Recession, But Sunny Side-Up for the Software Market!

India should worry about the global incoming recession. During the recession term, the top economic countries of the world like Europe and Asia saw a growth shrink sharply. The slowdown has upset the business in the Indian economy, which has led to increased job losses. The unemployment rate in India is at a 45-decade high that is already painting a worrisome image. India is at knock door away from violent economic spell. However, the current projections show that 55% chance of recession in the second half of 2020.

This slowdown is affecting the information and technology sector. Leading companies like HCL and Infosys Ltd have remained flat over revenue growth or witnessed a reduction. However, the software market in 2019 may continue to be strong. According to research by Gartner says that technology infrastructure in hardware sales will fall in 2019 with a Data Center System or core infrastructure for servers falling by 3.5% during the year. The hardware market will face a hard time and the software market will still grow by 8.2%

India has been facing the worst slowdown in months. The impact has been more on the Indian automobile industry, which is the fourth-largest in terms of sales and it has been facing deep wounds in the last 10 months. There has been a decline in demand and a slowdown in sales. The situation is similar in real-estate and banking. The great recession has been felt by many companies resulting in insurmountable job losses.

The good news is that the Indian tech industry has more focus on the software side. There have been more demands in software projects. And there is still a positive story for India than countries like China that is a big chip manufacturer.

Unique Solution to Flap Recession

Recession is a fall in GDP and negative economic growth. The best way to avoid recession is that the government and monetary authorities need to try and increase (consumer spending, investment, exports). The most important measure to flap recession is expansion of fiscal policy, which increases the level of aggregate demand that increases in government spending and reduction of taxes. The economy that is in recession produces below its potential of GDP.

The best way to flap recession is to be a part of the software market more that are in the Asia pacific, Australia and start-ups that are catching-up in the Indian market.

To stay in demand and abreast in the IT Sector. A software engineer should also possess multiple skill set to avoid getting laid off in the current climate. Some of the skillset professional should possess are:-

  • 1. Big Data
  • 2. Artificial Intelligence
  • 3. Mobile Development
  • 4. User Interface and User Experience
  • 5. Data Analytics
  • 6. Business Intelligence
  • 7. Cloud Technology

However, in the software market scenario changes very rapidly. Upgrading skill set and being aware of the US political climate is a sure shot way of staying in the business