Over the last few months, layoffs and a global investment crunch have rocked India’s startup ecosystem. Layoffs by giants like Twitter and Meta could make Indian tech companies jittery, and they may take cues and cut their headcounts in anticipation of harder macroeconomic conditions in the future.
But Somdeep Deb, vice president for consulting services at Right Management, says Indian tech companies should think carefully before cutting jobs. If the move is not thought-through, it can have serious long-term implications on the company’s image and its ability to attract top talent in the future.
Right Management helps professionals transition to new jobs by helping them find employment. Part of the U.S.-based ManpowerGroup, the company also works with organizations that are laying off staff, helping departing employees find new roles. Right Management has so far helped more than 3.5 million people transition to new jobs across 50 countries.
Has there been an increase in startups coming to you seeking help with outplacement services?
There are a lot of companies who have started speaking to Right Management after looking at the kind of backlash other organizations faced when they announced layoffs. Many companies have taken a hit to their branding, and their reputations are getting tarnished. So, a lot of companies have started talking to us to better manage this process.
Do you think the current trend of tech layoffs will continue in 2023?
I don’t see 2023 to be as bad or as unfortunate as this quarter has been. I think the message that has gone to these organizations is that they need to conserve cash better.
We are going through an unfortunate phase globally. A few organizations, which are the most aspired[-to] brands for employees, have been taking decisions to lay off staff. Of late, the numbers have grown and that’s scary. While some of the calls are based on the actual financial performance of organizations, unfortunately, some of the calls are also panic calls. When you see an industry leader taking such a decision, you also tend to fall in line and think that that’s the best practice so we should also take these calls.
What would you suggest to young startups that may be planning to lay off employees following the signals of their larger peers?
Organizations need to be a little more patient. As an economy, India has survived many such cycles, including the 2008 global financial crisis, and more recently, the Covid-19 pandemic. We have fought those and we have moved ahead. Organizations can’t keep applying the brakes every six months or keep fighting market forces forever. What would be better for them would be to set their targets focused on sustainable growth.
Job cuts have long-term implications, especially if they’re not thought through.
Could you elaborate on the long-term implications of layoffs?
The employees who are let go will not talk positively about the company. At a later time, if the company needs them back, they might not want to return. Also, what about the employees who are retained? If a company makes radical calls, the morale of the remaining employees may take a hit and they might become hesitant. They might even start looking for other jobs. So the company may consider them important but they could look out and leave for a better opportunity.
Layoffs also hurt business because customers have relationships with employees. Now, if these people are suddenly out of the organization, customers can feel nervous about whether or not their needs will be met.
There can also be an impact on a company’s ability to attract quality talent in the future as layoffs could convey that the organization has not taken care of its employees in the past. And this could even impact new business opportunities as potential customers may think that an organization that does not care about its employees won’t take care of its customers.