GLOBAL LAYOFFS

Source: PIB

Context:

Over the past two months, a slew of U.S. multinational companies including tech giants Amazon, Meta, Intel, Twitter and financial behemoths like Citi and Morgan Stanley, announced massive layoffs.

What is leading to layoffs?

• A potential economic recession is going on.
• With inflation soaring in most parts of the world, central banks have been trying to control it by increasing interest rates so as to make it more costly to borrow and consume. This will eventually affect economic growth and jobs.
• The International Monetary Fund (IMF) has cited forecasts for global GDP growth in both 2022 and 2023 as gloomy, given the pandemic and ongoing Russia-Ukraine war.
• Except for 2008 financial crisis numbers, estimates for 2022-23 and the next by the IMF are the weakest since 2001.

Outlook for the Indian IT industry:

The Indian IT services firms are among the largest employers in the organised sector and any global economic trend is bound to have an impact on their growth projections.

What about start-ups?

The Indian start-up layoff tracker by Inc42 showed that more than 15,700 employees had been laid off in 2022 given tightening funding conditions. Byju’s, Chargebee, Cars24, Ola, Innovaccer, Udaan, Unacademy and Vedantu are names that have been in the news for layoffs, according to Inc42.

The tracker showed that the edtech sector has laid off the most employees – 14 start-ups had laid off 6,900 employees in 2022.