Employee layoff is organizational consolidation

Posted by Ranjeet Menon
May 18, 2017

Self-Published

Layoff is probably the most feared, vile and despised word in the corporate sector. It has synonyms such as getting fired, terminated and getting the pink slip. There is plenty of misconception flying around presently about how IT companies in India are being perceived as abandoning their employees and are dumping them out.

There is an organizational level word for layoff: consolidation. Everything in our world works on the principle of sinusoidal wave. What goes up has to come down and vice versa. When there is more work companies need more people so it is natural that when work becomes less, companies wouldn’t need a lot of people. Up-sizing and downsizing are cyclical processes followed in every organization. IT is an industry that is particularly vulnerable to this. The entire IT industry thrives on the simple concept that all IT environments can be improved continuously and that is how IT service companies get increasing revenues every year. IT product companies make their bread and butter through software support and licenses. When companies decide to consolidate, the first mantra they adopt is the age old “Don’t fix what ain’t broken” and they apply this first to their IT environment. Companies do consolidation of their environment from time to time and cutting back on employee numbers during this time is not unusual.

There are important reasons why IT companies in India are gearing up to lay off a significant amount of their work force. One, IT companies hire many people anticipating more work to come in the near future and keep them on what is called as bench. A significant bench size is a huge liability for the company because these people are consuming money without generating any money so they are either assigned to whatever projects company gets or are let go from the company. The skill sets and aspirations of people who are assigned to projects may not be in line with the work in the project, so over time the number of unhappy employees increases. These employees have to be either retrained and absorbed into more relevant projects or let go from the company. So two levels of layoffs happen at the base of the corporate pyramid.

Then we get to the middle of the pyramid, the layer of the managers. When more people are hired, more managers are required so what can companies do with managers when people are being let go? Now there are two types of managers in every organization. The ones who join as lateral hires and ones who grow through the ranks of the organization. Where do managers grow from there? The pyramid narrows as we try to ascend it. It’s not just the underperforming managers but the best ones are also at the risk of being let go, for the simple reason that there is no scope for growth in the present organization so they are asked to look for growth elsewhere.

Letting people go is a very painful process, especially when it comes to employees who have been working for companies for many years and even decades. This is why I believe IT industry in India is jinxed and cursed in a way because thousands of people abroad have believed that their jobs were forcefully taken away and given to Indians. Companies avoid letting people go as much as they can unless they are pushed against the wall and are struggling for existence or they find specific reasons to lay off someone. I came across an audio clip recently in which an employee in one of the previous organizations I worked with has recorded her conversation with the HR. She was on bench for 7 months and finally she was assigned to a project in a different location than her current one. She hesitated and asked for more time to search for other opportunities. All companies require their employees to work from different locations if found necessary and it is made as a clause in employee offer letters. That employee had her family in her current location and it was very evident why she hesitated to move out. Irony is, she would have had lapped up the offer if she had been assigned to a foreign location rather than to another location within India. The best way out I believe is to quit the job rather than create a hassle about it. So companies already have built in a way of laying off employees in the offer letters itself if required.

Companies fire people only in extreme circumstances such as sexual harassment, financial irregularities, etc. Then there are companies that put the additional clause of handing the fate of the employees to their managers by giving them the right of termination in the employee offer letters. Being part of the corporate world is no easy game and we have to be well aware of all factors that can possibly affect us to the point of taking away our jobs. But I don’t see all badly about companies letting people go. The company I mentioned above at one point in time was letting go of people from one building while hiring for the same positions albeit lesser numbers and possibly lesser pay in another building. The Indian IT industry is only shelving up to 15% of it’s workforce which means companies are ready to gamble with the majority 85% which I believe is a huge number and there is no need to panic. I believe layoff is the constant reminder to everyone to retrain themselves continuously and keep themselves relevant enough to continue being part of the industry.

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