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Why Tech Firms Need To Reskill Employees Instead Of Layoffs To Drive Growth

Why Tech Firms Need To Reskill Employees Instead Of Layoffs To Drive Growth

Reskill Employees

“In technology, it is about the people getting the best people, retaining them, nurturing a creative environment and helping to find a way to innovate,” says Marissa Mayer former CEO of Yahoo. 

Today, in this ever-changing technology landscape, this adage is far more relevant for organisations than ever before as firms prefer layoffs instead of reskilling.

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Organisations from across the world are following a trend of layoffs as their workforce are becoming obsolete and are not abreast of cutting-edge technologies such as AI, Data Science, Blockchain, among others. As per HR consultants, around 10 lakhs software engineers are unqualified to handle tasks associated with new technologies. Besides, Nasscom reported that firms would have to reskill 40% of Indian employees in the next five years to be in line with new trends in technologies.

The Current Landscape

Most of the emerging technologies such as AI, Data Science, and more, revolve around the effective use of data. And require Python and R programming language skills that were once not the go-to language for any software developers. However, today, these are the most in-demand skills for tech organisations to compete in the market.

While skill gap in the new technologies is the prime reason for the layoffs, technologies such as android development and web development have now moved on to new languages and frameworks; thereby, creating further skill gaps even in fairly old technologies.

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Consequently, the mid-level employees, who in early in their career learned Java and C++ are facing the music due to the drop in the demand of such programming languages. Although C++ will remain the organisations due to its rise in Blockchain technologies, employees will have to learn fairly difficult technologies to stay relevant for companies.

Economic Slowdown

The skill gaps were always a part of the problem for tech firms, as they used to hire students from colleges and trained them with sought-after technologies. Until recently, barely any college offered courses in data science and AI, thus organisations always had to mitigate knowledge gaps through training.

Having said that, why are organisations now deeming the skill gap as the reason for layoffs? There are two predominant reasons behind their employees’ cutbacks. Firstly, due to economic slowdown, firms are facing the heat and willing to let go off the mid-level employees. The idea is to cut cost and improve the profitability when the demand from customers and clients are low. Secondly, value for money in upskilling the mid-level workforce to do new tasks while paying high salaries is very low.

Companies Spending On Reskilling

Since colleges that provide courses in the latest technologies are still insignificant, companies will have to cling on to their old practices of training freshers.

Accenture: Every year, Accenture spends $1 billion in re-training its workforce, especially in the field of data analytics, artificial intelligence, and cloud computing. Such expenditure helps them in upskilling 80% of their employees globally.

Capgemini: In 2019, the firm has reskilled over 51,000 of its senior-level employees in the cloud, big data, and DevOps. Upskilling boosts the morale of employees and motivates them to honestly work for the firm, this, in turn, results in increased customer satisfaction.

The skill deficit problem is not just in India, but across the world; Amazon has devised a plan to train a third of its workforce in the U.S.

Since there is a dearth of knowledge gaps, companies need to upskill instead of putting pressure on employees with layoffs, reducing bench time, and others.


Freshers are not market-ready; therefore, tech companies should trust their employees of every-level and facilitate a learning culture. Organisations that upskill their employees find it easy to attract new talents through referrals. Consequently, the money spent on training can indirectly have positive impacts on firms as it will streamline line the process of talent acquisition as well as enable them to deliver superior products with their help.

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