The crisis in the Indian IT sector
India's 150 billion dollar IT industry is reeling under crisis. Until recently, what was considered to be one of the most lucrative employment opportunities for the upwardly mobile Indian middle-class youth, is now shutting its doors to the job hunters. Layoffs and job-cuts have become order of the day. It is difficult to provide an actual account of the number of IT employees retrenched so far. Estimates vary from few hundreds to several thousands. The projections of job-cuts also vary. According to a survey published by Hindustan Times in July 2017, the top seven IT firms in India plan to lay off 56,000 employees this year. Whereas, Head Hunters ? an executive job search company, estimates that the actual job cuts will be between 1.75 lakh and 2 lakh per year in next three years. Irrespective of this statistics, the fact remains that the IT sector is haunted by retrenchments, layoffs and salary-cuts.
In response to this situation of insecurity and imminent threats of job loss, a sizeable section of the IT sector employees have started organizing themselves in the form of unions in an attempt to resist the ongoing onslaught. Ever since their inception, the IT employees have largely remained outside the ambit of trade union activities and were not recognised under the Industrial Disputes Act and not allowed to form trade unions. Perhaps due to the decent pay-package and nature of their jobs, the employees too, preferred remaining opposed to all external attempts to organize them in unions. However, in the wake of this present crisis, nationwide organizations of the IT employees having chapters in different cities have emerged spontaneously. Several petitions have been filled with labour commissioners, cases have been registered in different courts and the demand of "workmen" status has also surfaced, so as to protect the rights of IT employees under the industrial disputes act.
What are the reasons for this present crisis? The HR managers and top management of the IT companies are trying to make us believe that "this is a simple case of shedding the under-performers" as they have become "irrelevant" in an advanced production system. The bourgeois media on the other hand, while shedding crocodile tears for the IT workers, are citing new-age developments like automation, artificial intelligence, transition from back-office programming to cloud computing, etc. along with the new policies of the Trump government as the major causes for this large-scale axing. It is easy to understand the hollowness of the 'justification' of HR heads of IT companies. The "appraisal reports" and complaints of "under-performance" are all very familiar and have persisted for many years in the IT industry. Total lack of transparency in evaluation of employees, abrupt demotion or redundancy without giving proper reasons, workers being forced to resign by the HR teams - are some of the typical features of Indian software companies. Many mid-level team leaders or managers who had to write under-performing appraisal reports for their subordinates are now facing the same brunt from their superiors. It is a strange ladder. Every step has to try and move up by pushing down the step below.
It is an open secret that an overwhelming majority of the Indian IT companies have been and still are engaged in low-end IT jobs that require very little specialized skills. Rather, the skills that are required to perform these jobs are more often than not imparted to the apprentices at the very beginning of their career, and a workable knowledge in English and basic mathematics is more than sufficient to build these skills. Yet we know that thousands of engineering and science graduates, with fancy degrees and diplomas, had inundated the software industries. And what do they find themselves doing after a few years? Either, bugging, de-bugging similar systems, with the same mundane monotony, or leading a group of relatively fresh recruits to do the same repetitive jobs. Hence, the appraisal reports of the "bosses" are no-wonder subjective and tailor-made to justify "shedding of under-performers" as directed by the higher managements. Anyone, remotely connected to the IT sector, should be well aware of such appraisal processes. As long as the IT companies had the need, a chunk of graduates, irrespective of their software or computational skills, were recruited and made to work like horses. And, now these companies are trying to shed the workforce, not because the employees are under-performers, but because the sector does not need so many horses to run the Indian software cart.
Why is the requirement of software employees going down? Is it because of the tightening of H1-B visa norms by the US government? Or is it because robots, artificial intelligence (AI) and machine learning (ML) have started substituting human labour in the software industry?
It is well-known that a large majority of the Indian IT companies survive on the software jobs outsourced by the US and other developed countries. During the heydays of the Indian IT outsourcing boom in the post-liberalisation era, multinational projects like Y2K bug, internet, online banking, digitization of records, e-commerce etc. provided the need for a huge workforce. Many of the Indian IT companies, which were born around this time, earned huge profits just by engaging in what is known as body shopping. They employed people to do jobs related to such projects at rates much cheaper than that of the advanced countries like US. Both "on-site" and "off-site" assignments engaged these employees for more than 10-12 hours a day. Alongside, this phenomenon created a pool of relatively better paid work-force who also functioned as major consumers of the globalized market.
With the tightening of the H1-B US visa norms, "on-site" work of Indian professionals at the US would definitely become rare, but then the same reform of the Trump government would imply more jobs for the US citizens. What do we see in reality? According to the Current Employment Statistics Highlights published by the US Bureau of Labor Statistics on October 7 2017, employment in US IT sector continued to trend down. Since the most recent peak one year ago, IT employment has trended down by 79,000. So greater restriction of Indian workers working in the US has so far not resulted in any positive outcome for the US based IT workers.
Based on the above analysis many would be tempted to believe that robots, AI, ML, etc. are major reasons for the IT sector crisis. This in fact is the most prevalent understanding even among a large section of the IT workers. Are robots taking away the jobs? No. Nothing could be far from reality. First, let us look at few examples. TCS, one of the Indian IT giants have decided to shut down their Lucknow office. Infosys, is planning to close operations of EdgeVerve in Chandigarh and has asked about 300 employees to either relocate to Infosys Mohali with an average salary cut of 10-40 percent or to Bengaluru with the same salary. None of these are anyway related to AI or ML taking up human jobs. (Bata-da to provide more and solid examples. That AI, ML, etc are not at all the reasons for the job cuts is a strong opinion of Bata-da, and he is supposed to provide necessary examples to substantiate this point).
Despite the potential of AI, ML, etc. to substitute repetitive and mundane human labour, many software related activities, which could easily be substituted with machines or programmes are still carried out manually, simply because employing a few people is cheaper compared to revamping of a process with new technology. For example, the sorting of posts in OLX is still done manually. Globsyn, a relatively smaller business house employs a few people, who work overnight to run through all posts in OLX, 24x7 and sieves out the one that do not meet some specific criteria. Needless to mention that such boring exercises could have easily been replaced by data driven learning, but such implementation is probably more expensive than few contractual employees working day and night with minimal salary and benefits.
Although we have seen, AI and ML or robots are not responsible for the present crisis in the IT industry, the potential of AI, ML robots, etc. in replacing human labour can hardly be doubted. In a profit driven capitalist system, implementation of such technologies will definitely make many people jobless, just as the advent of computers did to the erstwhile huge clerical mass. However, whether the capitalist will be able to realize the potential of robots, AI, ML, etc. is difficult to predict. As long as human labour is cheaper than enforcing these new technologies, and as long as they do not see a greater profit in implementing new-generation automation, capitalists like today will continue to harp on the fringes of AI, ML and robotics without reaping the true benefits.
It is important to note here that implementation of newer technologies that can replace repetitive human labour is a threat to the working population only under capitalism. Automation or robots in principle should reduce working hours and make human lives simpler. However, capitalists are not bothered about human lives; their only aim is to maximize profit. Advanced machinery or new technologies for capitalists are not merely means for increasing productivity, but for increasing profit. And there lies an inherent contradiction which leads to the crisis of the capitalist system. Despite numerous efforts, capitalism as a whole is struggling to overcome the continuous waves of economic depressions. Apparently, the markets for investment and re-investment of capital are not expanding. We know that the only way a capitalist can make profits is by exploitation of human labour. The simplest way to increase profit is therefore to increase working hours and derive more work from workers. In general, capitalists implement new machines and technologies to increase per capita production by the workers which leads to an increase in profit in the short run. On the other hand, introduction of technology or new advanced machinery, at the same time replaces labour. Therefore, such replacements of human labour by machines or technologies lead to an increase in constant capital (part of capital spent on plant, machinery, raw materials etc.) as compared to the variable capital (part spent on wages). This in turn increases the organic composition of capital, i.e. the ratio between constant capital and variable capital. However, as exploitation of labour is the only source of profit, an increase in organic composition always tends towards falling rate of profit ? a phenomenon that has been explained by Marx at length in Capital.
The crisis of the IT sector is therefore intrinsically linked to the global crisis of capital. It is commendable that the IT workers have launched a struggle to organize and fight against the capitalist attack. We have discussed in another article in this journal, that despite some specific problems associated with this particular trade, the lowest strata of IT workers have considerable potential for assuming a significant role in the proletarian resurgence against stinking capitalism. We hope that such struggles will assist in uniting and preparing the proletariat as a class to combat the moribund capitalist system.
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