Sunday, 23 July 2017

Job losses in India too ?

My good friend who goes by the moniker of Vaingluory, at least on my travel blog, messaged me drawing attention to this story .  The opinion piece from a headhunter is titled 'Expect 100,000 to 200,000 Jobs to be Lost Every Year For The Next Three Years' .

There is a lot of hyperbole in this - I don't think India is going to lose jobs at that rate. Certainly not from the IT industry . But there is an undercurrent of truth , and there is a chill wind coming.

In the last 10-15 years, India, especially in the IT and BPO sectors has seen a pace of job creation that has been unmatched in its history. The impact this has had on people's lives is very visible in India's cities. In any other country, these job numbers would have been a spectacular miracle that would have transformed the country. India has a huge population and hence this is only a small wave in the ocean.

The young have come to believe that this scorching pace is the natural order of things and that anybody can get a job for the asking. Of course, this can't last for ever. The IT industry has matured and the rate of job growth has slowed down. That is only to be expected.  The days of "Tresspassers will be recruited" are long gone ! Companies are not recruiting in the same numbers. They are asking some underperformers to leave. Some have to cut their costs and so some layoffs have happened too. I do not see any evidence that there is going to be a large shrinkage of jobs ; there will be a much slower rate of growth and there will be some layoffs. But the overall numbers is not going to shrink in a short span of time.

But some global trends are inevitable and they will have a big impact. The most important of them is automation. This is an inexorable trend and will affect all industries including IT. This is going to be the single largest impact on jobs. It's a global problem without any easy answers.

The second problem in India, is agriculture. Agriculture has always been the sponge - the vast majority of the Indian population is employed (more accurately underemployed) here.  This sector is increasingly becoming financially strained, for reasons that are peculiar to India . Small land holdings, a major water crisis, inability to make significant profits, and the extent of risks for which there are no commensurate rewards. All these make agriculture likely to shed jobs on a scale that will be gargantuan. This has profound consequences for India. Manufacturing or services simply cannot absorb this load and even if they could, there is a massive skill gap for agricultural workers to migrate to other sectors.

India has one big advantage - an already strong services sector which will keep growing. This has the capacity to absorb skilled manpower. Touch any area and India has actually a huge potential for job creation. Judges, policemen, health care workers, retail industry workers, logistics industry workers, even professions like carpenters, plumbers, electricians - everywhere we have a shortage of qualified people even today.  Jobs will keep getting created in each of these trades. Many of them will be self employed . Many of them  may be in the government ; for example if we have to have a policemen to population ratio that is even remotely comparable to other countries, we will need to add millions of policemen. Ditto judges. Ditto nurses. 

The issue is skills. India has a young population that is extremely keen on education and willing to work hard. It lacks a real effective skill building initiative. The National Skills Development Corporation, if it really does its job, can transform India.


Sriram Khé said...

I tell ya, this digital automation--unlike the mechanical automation of the Industrial Revolution--is one major job killer. The employment multiplier seems to get dismal with every passing day, and worse than that is the wage multiplier (those with jobs don't get compensated as they might have expected to.)
The countries coming late to this--the likes of India and Nigeria--are going to have huge problems generating employment for their youth.

The trades have been massively shortchanged, yes. Parents seem to want to invest plenty of rupees for their sons and daughters to get a college degree from a third-rate college that barely functions when they will be better off with advanced vocational skills. Years ago, I remember meeting with a retired Loyola College (Chennai) principal, who wanted to set up something like the American community colleges where students could learn to become qualified tradespeople in 6 months to a year. I don't think he was able to sell the idea to the establishment because of the condescending attitude towards vocational education, and because the masses too think college is the only route.

If only the world listened to me!!! ;)

Ramesh said...

The targeting of the Loyola College principal was all wrong. Trying to get college students into a polytechnic (our equivalent) is impossible. We have enough and more school drop outs in India. That is the group to target. And he will get thousands of people already to come, if they can see a job at the end of it.

Automation remains the major problem. Its gathering steam and governments , if they wake up only after it has happened, will be run over by the bulldozer.

Ramesh said...

Sriram posted via email since Blogger was refusing to let him comment (Not clear what Blogger has against Loyala college !!)

Nope, you jumped the gun, it seems like, in remarking about the Loyola guy ...
It was more than a decade ago when I read about his (Xavier Alphonse) efforts to address the productive potential of dropouts and--this was important for him--disadvantaged women. After reading about him in The Hindu when I was in Chennai, I emailed him. We met twice. The guy was such a bundle of high energy ... he had the correct target population in mind. But, he couldn't get the government nor the philanthropists' attention to set things up.

Ramesh said...

Oh OK. Maybe it was before "its time". These days there are a number of organisations that do this with various constituencies.

Deepa said...

Since you mentioned BPO space, there is also this growing competition that we will be blindsided by. There are other countries with a cheaper and more skilled labor that are replacing Indians. The days where Indians had the language advantage (which I came to realize was so overrated) are gone. In the organization that I work at, we used to use BPO services based out of Bengaluru and Kolkata (, not anyone we know) and now work is moving to Philippines. It was heartbreaking to note that the new team is providing better service than the previous ones.

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