Indian IT Industry To Face A New Challenge: Shut Down of US Retail Industry

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The IT Industry of India, which is the driving force behind the booming economic growth and employment in the country, took a severe hit due to the sudden coronavirus outbreak. The business slowdown initiated by the pandemic resulted in the IT sector in India witnessing massive layoffs, furloughs, pay cuts and hiring freeze. Now, sadly enough, there seems to be more bad news heading its way.

Most Indian IT services giants such as Infosys, Cognizant, Tata Consultancy Services and Wipro happen to service the US retail sector which, because of the pandemic, has been facing a major slump in business for quite some time. Now these US retail companies are planning a hefty cut in their IT services budget which, in turn, will definitely further hurt the Information Technology companies of India.

Such development will have a far-reaching impact on the IT industry of India, worse than ever before.


Shutdown In US: Impact On Indian IT Service Industry

Because of this impending IT budget cuts from the US retail sector, the Indian IT companies who have a significant chunk of their revenue flowing in mainly from the ‘luxury’ retailers will be suffering another huge hit. As retailers who are in the non-essentials category expects that it may take a long time to bounce back from this pandemic, they have either cut down their spending on IT infra or halted it completely.

Last week, a popular US-based luxury fashion retailer Neiman Marcus declared bankruptcy after shutting down more than 40 stores and furloughing several employees. Another major US retailer J Crew which is a speciality apparel retailer did the same along with JC Penney which is one of the biggest retailers in the US now contemplating filing for bankruptcy as well after having shut down many stores.

Phil Fersht who is the Chief Executive Officer of HfS Research said that in the next three to four months overall IT support budgets of US retailers could drop by a whopping 50%-70% as most of them are looking to shift to aggressive cost take out programmes.

The adverse effect of US retail Industry has started impacting IT industry in India.

As of now, most of the Indian IT services’ companies, to deal with this pandemic, have asked all the freshers or new recruits to wait indefinitely when it comes to joining along with freezing all on-campus training activities.


Also, according to our sources, it has been found out that these IT service giants are currently resorting to hiring manpower ready to deploy in projects directly. This is in stark contrast to their previous practices wherein most of these companies always chose to have a sizable portion of their employees on the bench.

Analysts currently believe that Indian IT firms will be severely impacted. All the Indian IT service firms will have to revisit their future strategies something similar to Accenture, whose growth forecast was lowered to 3%-6% from 6%-8% due to the impact of COVID-19.

Employment Scenario in India: Bad To Worse

The job scenario for IT professionals in India is already quite demotivating. Companies of all sizes are on the firing spree. The news of massive layoffs and salary cut has become apart of daily affair nowadays.

The damages are not just limited only to large IT companies alone. Indian startups, of all size, are facing the heat as well. OYO, Meesho, Acko, Bounce and more had to let go of their workforce in huge droves in order to preserve revenue and reduce operational expenses amid this doomsday situation.

Thus, amid the shutdown of US retail industry, it can safely be assumed that being handed the pink slip is something that has started haunting all employees working in IT services companies in India. And this is will make the employment scenario turn from bad to worse for all the aspiring and thriving tech professionals who are already staring at an uncertain future in this testing time.

The Silver Lining

All of it has a silver lining attached as well. As companies are looking to cut corners and may turn back to the comparatively cheaper solution to keep the ball rolling, there can be a flurry of new opportunities for Indian firms who can offer low-cost alternative solutions.

It’s estimated that eCommerce industry will observe an increase of 10%-20% in technology services as it is pretty much evident that offline retail is dying a brutal death because of COVID-19. Hence, IT professionals who are looking for jobs will now be driven towards areas related to e-commerce, logistics and supply chain and analytics instead of choosing the traditional IT support services.

However, that being said, this shift will not come easily as getting into the relatively newer areas will require a different set of skills and expertise. Therefore, IT professionals must begin up-skilling themselves right away if they fear their jobs will get axed in the near future.

It remains to be seen what the future holds for the Indian Information Technology Industry post the end of the series of lockdowns and the pandemic. We will keep you posted on all future developments. Stay tuned.


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