The IT sector which was the crown jewel of the Indian economy and the powerhouse of innovation and growth is fed up. Where earlier there was bulk recruitment of entry level graduates, now these companies are laying off their employees. The IT sector has reduced its hiring by 7% in 2024-25 and as per last year’s data the countries top IT companies have reduced their workforce in seven quarters and top IT companies like TCS, Infosys, Wipro, LT, Tech Mahindra and Cognizant have laid off around 75000 employees in their organization and this is the biggest layoff in 6 years (2019-2025). Today most of the big IT companies are in their survival mode and hiring has become a great part of it. There are some reasons behind this like USA’s interest rate and geopolitical uncertainty has played a vital role in this and also Artificial Intelligence (AI) has ruined these IT companies. And according to the statistics more than 80000 IT companies want to work with Artificial Intelligence and come out of the crisis. And Philippines, Vietnam and China have also become technological superpowers and are giving very tough competition to India. Due to this India is losing its monopoly in the IT sector. So it is very important to know all the factors that are causing the crisis in the technology world. So let’s understand the technology world and know why the crisis is happening here.
INFORMATION TECHNOLOGY REVOULUTION
Information technology and communication is the great success of independent India. Indian IT sector plays a vital role in providing software services, Business Process Outsourcing (BPO) and collaborating with business and by providing good services it generates the major part of GDP of the economy. And IT sector is a very essential part to make the economy of any country strong and it also makes the stock market of the countries strong. And if the stock exchange will be strong and the market will work smoothly then it shows the stable economy in the world and when uncertainty will come in the market then firstly it will affect the economy and make the economic structure unstable. Indian IT sector is very essential part of Indian economy, it generates about 5 million jobs directly and indirectly and generates the major part of the revenue. As per the data, Indian IT companies have generated $245 billion in FY 2023 and out of this only $194 billion has been generated from exports and around $54 billion from the domestic market.
LABOR ARBITRATION MODEL
Indian IT companies business is completely based on labour arbitrage model. It means cheap labour and more work, as per NASSCOM data Indian IT companies run their business with basic software coding, software testing, customer support and BPO. But AI and automation has changed all the things and now technologies are developing very fast and getting updated soon, that is why basic skills, traditional education and technologies are not able to match with it. Emerging technologies will become the biggest gap with skill gap in 2025. Now all industries want to get automated and it is estimated that about 70%-80% of IT tasks may get automated in 2025, which will have a negative impact on millions of jobs and hence many people will lose their jobs due to emerging technologies, automation and artificial intelligence.
ACADEMICS CURRICULUM
The condition of Indian education and academic curriculum is very poor and our academic curriculum is not fit according to the market demand and there is lack of industrial opportunities in rural areas. The condition of Indian education and collaboration with industrial needs is very poor in our country. According to statistics about 1.5 million engineers graduate every year in India but only 22% of engineers in the engineer graduates group are employable and about more than 60% of engineer graduates face problems in getting jobs according to their skills. India is the major hub of engineer graduates but there is a huge gap between actual employability and engineer graduates in India. And this is a big challenge for Indian economic growth as well as technological development. According to NASSCOM in future India will need more than 1 million engineers in Artificial Intelligence, Machine Learning and Cloud Computing. But it is expected that by 2028 the demand supply in the digital gap in India will increase by 25 to 30%. And as per India Graduate Skills Index 2025 only 42-43% people are employable and it is down from 44% in 2023. Skill gap is the only reason behind this. That is why Indian government is trying to improve the education system and reduce these skill gap. And Prime Minister Mr. Narendra Modi said that there is a need for reskilling and upskilling the workforce for emerging roles for industrial leaders. For industrial leaders they need to focus on machine learning, cloud computing and cyber security and invest funds and heavy scaling program in it and also schools and colleges need to develop emotional intelligence, creativity, complex problem solving and human skills.
UNSKILLED WORKFORCE
According to statistics India has a huge amount of unskilled workforce, Indian graduates whether they are MBA, MCA, B-Tech, BSc, BCA, M-Tech etc students they don’t have skills as per their education and degree. India has a huge size of middle class and they can’t afford top institutes like IIM, IIT and top medical colleges and universities because their fees are very high. And the colleges and schools where middle class people go to study don’t have resources to provide high level education and give them top management and technical skills. So in our country there is a huge gap between the education system and industrial collaboration, that’s why our students get educated but they are not able to get jobs as per their degree and skills and this is very important thing which the government needs to think about and try to improve these systems.
SERVICE BASED INFORMATION SECTOR
From the very beginning Indian IT sector has been mainly service oriented, as an IT manufacturer we have not focused on manufacturing our products in our country. Even today we are far behind China and US in innovation and patent filing and we have not given priority to research and development, we have become only service provider in IT sector. We have worked only as service provider whether it is customer support or business process outsourcing. And due to this we may lose our global competitiveness. Research development and innovation are very important part to maintain our global competitiveness as well as our economic growth.
HARD COMPETITION WITH VIETNAM, PHILIPPINES AND CHINA
Indian IT sector is facing tough competition with Vietnam, Philippines and China. Vietnam’s IT sector is booming due to its cheap labour cost, government support and government policy and as companies are moving towards Vietnam for cost effectiveness, the pressure on traditional dominance of Indian IT firms is increasing. Indian operating cost is also the reason for this shift. In India the operating cost in IT sector is very high, those who have competitive skills in IT are getting huge amount of salary. Due to salary hike in India IT firms are looking for best alternatives to do their work and Vietnam, Philippines and China are attracting these IT firms, as Vietnam’s young and well trained workforce has become the best attraction and best option. Vietnam is booming as a new tech hub and it is becoming a challenge for India. Lack of skilled professionals and limited venture capital funds are the many problems the industries are facing. But Indian tech professionals, experts and their adaptability and innovation are recognized in the world, if Indian tech professionals will upskill themselves in AI, Machine Learning and Cloud Computing on time then they will again be recognized as an industry leader in the world.
CYBER SECURITY THREAT
Cyber security is a big challenge for IT firms as in today’s time cyber attacks are increasing due to Artificial Intelligence and Ransomware as a Service Platform (RaaS), low skills of people due to easy use of technologies can easily commit cyber frauds. And also new obstacles are developing due to 5G technology which can be exploited by cyber fraudsters. So it is very important for IT firms to deal with these threats, it is necessary to invest in regular security audits, awareness training and AI driven threat detection and also they also need to meet both Digital Security Act and IRDAI Cyber Security Threat 2023 and implement cyber security practices and prepare cyber security workforce that can deal with these increasing cyber security threats.
GOVERNMENT INIATIVES TO DEAL WITH THE CRISIS IN IT SECTOR
The government has recognized the crisis in the IT sector and is making industrial policy to come out of these crises and the government is running ambitious initiatives like AI for every Indian. And it is expected that in 2025 Indian IT spending will grow at a rate of 11.2% which will reach $160 billion. Here it is very important to know that IT industries are cyclical industries which are very much connected to the global economy, when the global economy faces instability then it directly affects the IT industries and when it recovers then these recoveries in the IT sector are very slow, that is why this sector is very vulnerable to external shocks. Indian IT industries are still facing the global economic slowdown which has come in 2021-22.
Some of the initiatives and steps taken by the government to come out of the crisis in the IT sector are as follows,
MAKE IN INDIA PROGRAM –
Make in India is an initiative by the Government of India to create and encourage companies to develop, manufacture and assemble products in India and to encourage dedicated investment in manufacturing. The policy approach was to create a favourable environment for investment, develop modern and efficient infrastructure and open up new sectors for foreign capital.
INTERNSHIP OPPORTUNITIES –
Indian government has taken initiative to make our graduate youth skilled. As per internship opportunities government will provide internship to Indian graduates in top 500 companies and will give Rs. 6000 in the first month of internship and companies will also give stipend to interns.
CONCLUSION
Indian IT sector is facing the global crisis and to come out of this crisis, the government is taking initiatives and also making policies for industrial development.
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