The Impact of Global Chaos on Layoffs in Multinational Companies
In recent days, you may have come across news of layoffs from several companies, with the letter "k" being used to denote the thousands of employees affected. The fear of losing one's job has been at the forefront of many people's minds, especially in light of the global chaos that has caused anticipation of a future recession. This has led to a great deal of anxiety and uncertainty for those affected and for those who fear they may be affected in the future.
Layoffs Surpass 60,000 in September and Impact India's Export Prospects
In recent months, news about layoffs from several multinational companies has been circulating on social media and news apps, causing concern among many employees. According to a global placement and coaching firm, the layoffs have surpassed 60,000 in September, and experts predict that it will impact India's export prospects, particularly in the IT sector.
Global Chaos Leads to Massive Layoffs in Multinational Companies
Several US-based multinational companies, including Amazon, Meta, Intel, Twitter, Citi, and Morgan Stanley, have announced massive layoffs. The ongoing pandemic and the Russia-Ukraine War have resulted in a dark forecast for global GDP growth in both 2022 and 2023, as cited by the International Monetary Fund (IMF).
Inflation Rates Increase, Leading to a Potential Economic Recession
Inflation rates have increased up to 23% since September 2021 in many parts of the world, including the US, UK, Germany, and India. This rise in inflation has led to central banks raising rates to contain it, which has resulted in a potential economic recession underway. As a result, 10 big developed economies have raised rates by a combined 2,365 basis points (bps) to date.
The Indian IT service firms are among the largest employers in the organised sector, and any global economic trend is likely to have an impact on the growth projections of IT services firms. However, all top IT companies except Wipro saw a rise in revenue and net profit, and the attrition rate is still high, indicating no visible impact yet. Nonetheless, the companies may look into headcount numbers if they want to cut costs and protect profit margins.
EdTech Startups Hit Hard by Layoffs
The layoff news in the Indian startup front is primarily in the EdTech sector, with more than 15,700 employees laid off in 2022, according to the Indian startup layoff tracker by Inc42. Byju’s, Cars24, Ola, Innovaccer, Udaan, Unacademy, and Vedantu are some of the startups that have announced layoffs, citing fewer internet users visiting educational websites and tightening funding conditions.
To conclude, it is expected that the deployment of next-generation technologies such as artificial intelligence and robotics in top tech companies will lead to further aggressive layoffs. However, the top talented resources will be best utilized by new-age startups.
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