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Working at a FAANG company is the ultimate dream for many engineers and techies. But looking at what transpired in the past few weeks has made even the biggest fan a bit of a sceptic. This week Meta laid off 13% of its workforce (11,000 employees) in what is being called the company’s biggest workforce decimation. This closely follows Twitter’s sweep of 50% of the total workforce. As many as 180 of the 230 employees of Twitter India’s team were sent packing.
Global companies are undergoing a corporate bloodbath, and Indian companies, unfortunately, aren’t completely immune to it. Edtech giant Byju’s, in its latest layoff, asked 2,500 employees to leave. Byju’s is joined by companies like Cars24, Meesho, Ola, Udaan, and others – many of these companies being Unicorns. As per media reports, the total number of laid-off employees in startups alone is over 15,700 in 2022.
This is worrisome as tech companies are often considered as indicators of the broader economy, and going by the latest happenings, one can’t help but anticipate an upcoming recession, which could mean more mass layoffs in the near future.
When trends change faster than seasons
This year has been pretty tumultuous for the tech industry. At the beginning of the year, we saw the Big Resignation – a term coined to describe an economic trend of mass resignation among employees in the post-pandemic era. It may be hard to believe now, but just in June this year, a report titled The Great X by recruitment agency Michael Page stated that in 2022, 86% of the employees were planning to resign or accept a lower salary to focus on better work-life balance and overall well-being. This was also in response to companies calling back employees to the office.
Some companies started taking a stricter route. For instance, TCS sent mail to its employees informing them of mandatory work from the office at least three days a week. Failure to comply with the order would result in administrative action, the mail informed. Not just TCS, many companies that promised WFH options earlier (in varying degrees) asked their employees to get back to the office.
Cut to the current times, mass lay-offs are the talk of the town – more prevalent in the startup scene. Since the beginning of 2022, funding in Indian startups has been seeing a downward trend. Against the USD 4.6 billion raised by startups in January, this number shrunk to USD 1.3 billion by October. Many startups are facing high cash burns and poor profitability. Investors like Y Combinator have instructed them to cut costs, and startups have figured out the easiest way to do this – mass layoffs.
At present, all labour laws, except the Factories Act, 1946, the Industrial Disputes Act, 1947 and certain State labour laws, apply to IT Industries. However, many companies try to circumvent these laws to protect themselves from any possible legal discourse as may be applicable in cases like alleged wrongful termination.
“More often than not, the companies make employees sign documents at the time of joining with fine print indicating that they may take any action required to protect themselves in extreme cases. Of course, neither the extreme case nor the action is clearly defined. This makes a company’s job a lot easier when it decides to terminate an employee’s services without facing many challenges. This seems to be the case with the ongoing layoffs,” Dr Manjula Choudhary, advocate at Rajasthan High Court, Jodhpur, told AIM. Dr Choudhary also told us that currently, IT companies and their employees come under the ambit of The Companies Act 2013, which tips in favour of the corporates.
Layoffs and retrenchments require permission from the labour department. This is applicable to all companies with over 100 employees and to employees who have served over a year of service. Additionally, the organisation must have the necessary documents in place and a valid cause for the said termination.
To avoid this hassle, many companies have adopted a new method where employees are forced to file their resignation. “The employees are forced to resign, sometimes accompanied by threats to future job prospects. In such a scenario, the employee may find themself isolated and frightened and, eventually, give in to the company’s demand. This makes it very difficult to legally challenge it,” Suresh Kodoor, founder and CEO of Kodvin Technos (a management and technology consulting initiative) and a member of Karnataka State IT/ITeS Employees Union (KITU).
Kodoor added that the best option in such situations would be for employees to present a united front. He cited the example of Byju’s incident in Kerala, where the edtech giant had allegedly decided to shut down its Trivandrum office without prior notice and forced more than 170 employees to resign. This was opposed by employees at the Trivandrum office along with officials of Prathidhwani, a welfare organisation of the techies. Finally, the Kerala government intervened, and Byju’s rescinded its decision.
This incident also highlights the role of the government in ensuring the protection of tech workers’ livelihoods. “No for-profit business is likely to prioritise the livelihoods of its employees over profits when things really come down to the wire. Therefore, it is the job of the government to compel businesses to minimise the loss of livelihoods in challenging times. The neoliberal consensus that the Indian government seems to have bought into denies this simple fact,” Saubhik Bhattacharya, general secretary, All India IT and ITeS Employees’ Union, told AIM.
A more humane approach
Times may be hard, but company reactions needn’t be. To begin with, all the options must be carefully considered before taking any drastic action, like workforce termination. Alternative options should be sought, like cutting down on wasteful expenditure and adopting austerity measures.
Further, transparent and proactive communication should be adopted by companies. Employees should be apprised of the situation and the future course of action that the company decides to take.
Lastly, in cases where layoffs do become inevitable, the process should be as respectful and compassionate as possible. The higher management could use their network to help laid-off employees find new jobs. This has been done by a few Indian startup owners, and we hope others would follow suit.