"Job cuts in Tech Sector? What will happen to IT Stocks"
Due to economic slowdown and the fear of recession, the tech sector was already experiencing shocks, losses, and recruitment freezes. However, now multinational companies have started downsizing and handing out pink slips, meaning termination notices, to their workforce.
Meta, led by Zuckerberg, has already decided to lay off 12,000 employees (15% of the total workforce), and Elon Musk’s Twitter laid off around 50% of its employees globally last week, including nearly 90% in India.
Microsoft has downsized three times this year and showed the exit door to around 1000 employees last month. Amazon’s earning report also indicates a decrease in headcount, and Netflix and Snapchat are facing similar situations.
With all tech companies resorting to layoffs and freezing recruitment, a global atmosphere of panic has set in.
Interestingly, the Indian IT sector is well diversified across various verticals, especially BFSI (Banking, Financial Services and Insurance), pharma, telecom, and retail, where Indian IT companies globally provide software (development), hardware (designing and manufacturing),
Technically, the Indian IT sector is dependent on large global banks, pharmaceutical companies, and other MNCs. Indian IT companies provide services such as data analytics & processing, tech support, consultancy, and risk and security management to these sectors.
Therefore, Indian IT companies are currently not facing any threat. In fact, Indian IT companies are growing rapidly. All their Q2 results have been quite good. While Infosys saw a 11% YoY profit increase, TCS saw an 8.4% increase, midcap IT company MindTree saw a 28% rise in YoY profit, and Coforge also saw a 36.6% rise. And considering the current predictions and expectations for the Indian market and economy, things are good for now.
However, when it comes to job cuts, firing, and downsizing, nothing can be said for certain. Sometimes even CEOs are let go (For instance: CEO of Twitter). That’s why it’s very important to prepare for unforeseen scenarios and plan to grow your income, savings, and wealth properly. Surviving in this rising inflation with just salary and savings is difficult, and how will you achieve your goals and dreams without accumulating wealth?
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