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Trump Blamed for Job Losses as India Tech Workers Face Cuts

Bloomberg logoBloomberg 24-05-2017 Saritha Rai
A man speaks on a mobile phone as pedestrians walk past the Tidel Park information technology (IT) hub in Chennai, Tamil Nadu, India, on Monday, July 21, 2014. Optimism about a revival in Asias third-largest economy is rising after the landslide election victory in May of Prime Minister Narendra Modi, who has pledged to accelerate investment in the nations highways, power plants, ports and housing.: 1495577599_India-jobs © Bloomberg/Bloomberg 1495577599_India-jobs

(Bloomberg) -- Swapana Bhosale was stunned when she found out earlier this month she was losing her job at tech services provider Cognizant Technology Solutions in India. Layoffs in the business are rare, particularly if employees are in the middle of client assignments like she was.

“Pulling people out of projects to sack them is unheard of in our industry,” said Bhosale, who demanded to be fired rather than resign so she can take legal action.

The 36-year-old sees an unusual culprit behind job losses in the country’s outsourcing industry: U.S. President Donald J. Trump. She thinks his immigration policies are contributing to early cutbacks, aggravating losses that come from automation and softer customer demand. Cognizant and peers like Infosys Ltd. and Wipro Ltd. won’t disclose how many jobs they cut, but it appears the industry is going through one of the largest retrenchments in its three-decade-plus history.

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Bhosale’s not alone in blaming Trump. In cities like Bangalore, Chennai, Pune, Hyderabad and Kolkata, thousands of engineers who have been axed or face dismissal are banding together on social networks and WhatsApp groups to decry Trump’s policies. They are discussing the creation of the first industrywide IT labor union, which may foreshadow broader changes in a $110-billion business at the heart of India’s economy.

“People are angry,” said 25-year-old Pankaj Kumar Singh, a software analyst who was dismissed from Cognizant’s Kolkata operation after two years at the company. “They feel Trump’s policies have a lot to do with the firings.”

A man speaks on a mobile phone as pedestrians walk past the Tidel Park information technology (IT) hub in Chennai, Tamil Nadu, India, on Monday, July 21, 2014. Optimism about a revival in Asias third-largest economy is rising after the landslide election victory in May of Prime Minister Narendra Modi, who has pledged to accelerate investment in the nations highways, power plants, ports and housing.: 1495577623_India-jobs-homepage © Bloomberg/Bloomberg 1495577623_India-jobs-homepage

Job Cuts at Indian Outsourcers Aren’t Trump’s Fault: Gadfly

The view from the “Make America Great Again” president is different, of course. Trump campaigned on the idea of bringing back American jobs and frequently criticized the outsourcing industry for replacing U.S. workers with those from overseas. Trump is tightening the criteria for letting foreign employees into the U.S., particularly through the controversial H-1B visa program.

India’s outsourcers are moving to adjust. Earlier this month, Infosys said it would hire 10,000 American workers in the U.S., jobs that in the past may have been filled with foreign employees on temporary visas. That has incensed workers who have taken to WhatsApp groups to argue the company is firing at home so it can hire in the U.S.

Complete coverage on India's IT crisis

Infosys, Cognizant and other companies say that is not the case. They say any exits are routine and performance-related. “We do this every year and the numbers could vary every performance cycle,” Sarah Vanita Gideon, an Infosys spokeswoman, said by email. The 200,000-strong company is still hiring and a batch of fresh recruits will soon begin their training, she said.

Cognizant, with headquarters in Teaneck, New Jersey and more than three-quarters of its 260,000 employees in India, said it has not conducted layoffs and will continue to hire. Some employees are “transitioning out of the company” after performance reviews, Harsh Kabra, a spokesman said via email.

Still, the backlash has swelled to the point where the trade group Nasscom decided to convene a press conference in Delhi last week to address the outcry. With representatives from Cognizant, Wipro, Tech Mahindra Ltd. and Mindtree Ltd. present, Chairman Raman Roy denied reports of mass dismissals. He said 170,000 new jobs were added to the 4-million-worker industry in fiscal 2017 and has continued to be a ‘net hirer’ in fiscal 2018.

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That’s little consolation to people like Bhosale. She contributes to mortgage payments on the family’s two-bedroom flat and had just enrolled her 3-year-old in a pricey pre-school when she was notified of the firing. She pleaded for time to find a new job, but had her request denied.

She has turned to social media to cope with unemployment. She joined a WhatsApp Messenger group to swap advice and gossip with nearly a hundred Cognizant colleagues in the same predicament. Such digital forums now abound with rants against managers and memes on Trump.

“I hate Trump…” one newly-terminated worker of Cognizant railed anonymously on a Facebook Confessions page. “I remember the day he was elected…I never thought it had so much direct impact on my life/career.”

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Trump, Tech Clash Over Visas for Skilled Immigrants: QuickTake

The worst is yet to come, said Kris Lakshmikanth, chairman of the Bangalore-based talent search firm, The Headhunters. He anticipates terminations will accelerate and top 150,000 or even 200,000 next year. “In my 25 years in executive search, managers were rarely fired. This year, I reckon Cognizant alone has let go of 1,500 managers to be replaced with less expensive resources.”

Workers have begun debating what could be a landmark union. Though trade unions are common in India in manufacturing and transportation, they have never had much success in information technology, in part because of double-digit pay hikes, attractive perks and foreign postings.

But with those heady days over, workers are feeling the pain of terminations. In Bangalore, Hyderabad and Chennai, groups of ex-employees are petitioning local governments’ labor commissioners to intervene. In Chennai, the only region where tech employees were recently allowed to set up or join a union, employees have formed an IT wing with the New Democracy Labor Front.

The NDLF is calling for more transparency and accountability as the tech industry deals with the downturn. “Why are companies cloaking such large-scale firings under the guise of performance appraisals?” asked S. Kumar, a representative of the NDLF 

He said the union is getting hundreds of calls and emails from workers across the country who have been laid off or are worried they will be. The union is advising such workers not to resign and to keep phones switched off to avoid calls from HR. “The companies are accountable to the government,” said Kumar. “Didn’t they benefit from subsidized government land, tax holidays and other freebies by saying they are creating jobs and boosting exports?”

To contact the reporter on this story: Saritha Rai in Bangalore at srai33@bloomberg.net.

To contact the editors responsible for this story: Robert Fenner at rfenner@bloomberg.net, Peter Elstrom, Reed Stevenson

©2017 Bloomberg L.P.

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