Mass layoffs in tech firms expose ‘raw’ side of capitalism

Layoff at global technology giant Oracle has sent shockwaves in the Indian IT industry. While Oracle has laid off around 30,000 staffers across the world, about 12,000 employees in India have reportedly been affected. Social media is flooded with affected employees’ posts and reactions on how they didn’t have any inkling about such massive layoffs being planned by their employer. Some staffers have posted that they have been frequently judged as ‘star performers’ and despite that, they had to face the axe.

The scale of employee optimisation at Oracle shows the risks of working in the technology industry in the AI era. More importantly, this has happened for the first time in the GCC (Global Capability Centre) ecosystem, which has been known for their job stability. With around 1,900 GCCs and more than $64 billion of exports, India is leading the way in the global GCC ecosystem. From American to European to Asian, thousands of foreign companies have chosen India to be their technology centres.

Technology professionals in India usually prefer GCCs over pure-play service companies for jobs as they see higher compensation, better work-life balance and higher profile of technology work. Against this backdrop, Oracle layoffs have come as a shock to many. But layoffs in American technology companies are not new. For the last three years, lakhs of jobs have been cut in big American corporations. Amazon, Meta, Google, Microsoft, Salesforce, among others, have been at the forefront of such employee optimisation moves.

And the reason for such layoffs has been attributed to AI-led developments. AI-led automation is one the reasons for making job roles redundant, leading to job losses. However, there are more to it than the popular narrative. For instance, Oracle has been investing heavily in AI infrastructure like data centres and other related areas for which it is planning to invest around $8-10 billion. So, current layoffs are a way for the company to reduce employee cost and divert that saving to AI-related investments.

Notably, Oracle co-founder and Chairman, Larry Ellison figures in the top 10 rich list of the world. His wealth has been growing due to the ongoing AI wave. Ironically, even a 5-10 per cent cut in promoters’ payout and top executive salaries could have saved many jobs. But capitalism perhaps doesn’t work that way, especially in the US. Hiring and firing of large-scale employees have been a norm in the world’s biggest economy and these actions have always been justified in the name of market forces.

In comparison, India Inc seems to be doing better. Despite AI-led disruption and close to 30 per cent fall in market cap of most IT services companies, mass layoffs have not been seen in the Indian IT sector. Though hiring has come down drastically, layoffs by companies are few and rare. Perhaps, capitalism in India has a compassionate side.

This works well for India because of the lack of any social security umbrella and low per capita income. Overall, technology sector employees must be prepared for any AI-led disruption affecting their job stability. But they should leverage AI as a ‘force multiplier’ for career growth rather than falling victim to any corporate house’s abrupt change in strategy.