IT sector dims as beacon of Indian job creation

In a lab deep within Tata Consultancy Services’ landscaped campus in the western Indian city of Pune, 16 recent graduates are experimenting with new technologies that are shaking up a flagship national industry.

TCS, the largest of India’s powerful IT services companies, set up the lab 18 months ago to enable new starters to work on the “internet of things”, the field of connected machines and appliances that is one of the company’s fast-growing areas of business — and one on which the company’s future depends.

Since then, the young team has produced three ideas the company will now market to clients, including a system enabling technicians to find data on an appliance by looking at it through smart glasses and another that creates alerts when machines are at risk of malfunctioning.

“We’ve moved away from the repetitive work — we’re getting a chance to learn something new each day, so it doesn’t become monotonous,” says Priyanshi Saxena, 23.

But while the shift to disruptive new technologies has opened exciting new opportunities for Ms Saxena, it is fuelling concerns about the job prospects for others in her generation, as India agonises over how to find gainful employment for its booming adult population.

The IT services industry, a totem of India’s increasingly modern, outward-facing economy, has been a powerful driver of skilled job creation over the past three decades, and employs about 4m people. 

While the sector continues to add new workers, however, employment growth has been slowing, lagging well behind revenue growth: 150,000 new positions were created in the sector during the last financial year, according to trade body Nasscom, down from 230,000 three years before.

That trend reflects the increasing importance of new fields of business such as data analytics and connected devices, which Nasscom predicts will account for at least 38 per cent of industry revenue by 2025. This cutting-edge work tends to be driven by relatively small numbers of highly specialised workers, unlike the labour-intensive software installation and management work in which the companies first made their mark.

“What we hired last year was less than a year before, and this year will be a bit less again,” says Ajoy Mukherjee, TCS head of human resources. “It’s the story of any automation — technology makes human beings more productive. So revenue per person will go up, and the team size delivering one unit of revenue will go down.”

With 1m young people entering the workforce each month, fears of insufficient job creation loom increasingly large in India. Demand for skilled labour has held up better than for blue-collar workers over the past five years, but “now seems about to conk off comprehensively”, brokerage Ambit Capital warned in February, noting structural…

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