Tech Layoffs | Mohandas Pai: TV Mohandas Pai’s advice for young techies: Work 12-14 hours, keep learning and save


“Big IT services companies are becoming cautious. They do not want to add on costs, they want attrition to come down and costs to come down. Things will remain normal and they will resume hiring possibly in the January, February quarter because by that time they will be very sure about next year,” says TV Mohandas Pai, Chairman, Aarin Capital Partners & Former Board Member,

It is a scary time. Meta is laying off 11,000. Back home we have seen thousands and thousands of employees already laid off, many more jobs are on the block. What is your advice to all of these employees who are now out of a job?
My advice is very clear. The global economy is cyclical. There are times of irrational booms when everybody is hiring, everybody is spending money and then it blows up and comes down for various reasons. Then there are layoffs and this has happened many times in the last 30 years and it is going to happen many more times in the next 10 years.

In the startup space I think it happens every 18 months. In the economy it may happen maybe every three to five years. We had a good run in the United States for technology, there was the IPO boom, all kind of high valuations and people thought the party will go on forever and most of the companies started hiring much more in advance because adding people is a sign of growth and they were spending money so that they could raise more money and now the economy is coming down in the US, primarily because of increase in interest rate and high inflation. There is cost cutting and they are letting people go and this is going to happen again.

But the overall numbers being let off is very small compared to the base because there are more than six million people in the United States, maybe 50,000, 100,000, 200,000 would be laid off. Yes it is sad for the person who are laid off but overall for the economy these are small numbers, not a catastrophe.

In India, in the services industry, there are more than five-and-a-half million people including startups, maybe six million people and the layoff that is happening in India is around 10,000, 20,000, 30,000, 40,000, etc. These things are going to happen again. We must learn to take it in the stride.

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My advice is very clear. When you get a job, save up money in the first five, ten years and please build up a reasonable kitty so that you can survive on savings at least for two-and-a-half, three years. Be very frugal in investment and do not go into debt too much, especially consumer loans, BNLP and all the nice stuff. A house is okay because you need to stay but the rest, be careful.

Do not buy expensive cars in the early years of your career, just walk and take the public transport or something else and live a very frugal life because you need to save. You are part of the capitalistic economy and if you happen to be laid off, just brush up your CV and make sure that you take some courses to improve your productivity, improve what you are learning and get fresh in terms of technology learning. If you are able to do that, when the market rebounds, you will be in the job market and people will hire you because your skills will be uptodate.

So, please keep learning because for the first 15-20 years of life you want to keep learning in technology. If you happen to be a manager, please make sure that you save money because every time you shift jobs, people give you 25-30% more and the danger for everybody who has gone up the ladder is that they get overpriced. If you are getting a high salary, people will ask why am I paying this person such a high salary when I can get a fresher or somebody else to do the job or they can automate and use an AI. This has happened every year for the last many years.

The service industry in India grows because the cost per person is maybe 20% of what the cost per person in the United States is. If the person is doing the same job for 25 years, getting four times more salary than the person at the fresher level, definitely that job is at stake.

So, upgrade skills, keep some savings, be part of the economy, be cheerful. The world is not ending and slug it out. I know it is easy for me to say all this and tough for you. But the world is not going to end and in my time, we were all paid peanuts. For the first 15-20 years of my career, we hardly earned anything but we lived frugally, built up a little bit of savings, upgraded our skills, worked very hard. Let me tell you I want to be honest with you. I do not want to talk about nice stuff because it is politically correct.

In the first 10 years of life you have to work 12-14 hours a day to make an impact. Work life balance is fine but understand, work is life. HR will come and tell you about work-life balance, events, etc, but when they get laid off, what happens to you? You get laid off unless you are productive. If you compete with everybody and do better than everybody, then your job is much more secure.

And if you think work life balance is more important, you can goof and not perform well, then when the time comes,you are gone and nobody cares for you. It is a merciless system and most people in technology are machinery. We have seen the big IT companies have 21%, 22% attrition. They all left not for stable employment; they left for higher salaries. When you leave a company for a higher salary and keep on shifting jobs for two to three years, you must expect that somewhere you are going to get stuck and overpriced.

So keep upgrading your skills, work very hard to compete even if you have to spend more time it is fine, it is okay because we live in emerging markets, we are not a rich country. There is too much competition, too many young people coming into the workforce, too many smart people. So, save a lot of money and live a simple life.

I take all those points but there is only one thing that with what has happened today, an employee who might have been working very hard 14 hours, 15 hours, maybe 16-17 hours is being sacked and maybe the merit is not being looked at because that is the situation. We seem to be in at the moment or is it not so dire?
Let me tell you that it is not a common condition because if you are running a corporation and you want to remove people, whom do you remove? First you remove the slackers or the people who are at the bottom of the pyramid, who are not working very well because you got all their ratings. Most companies do that. You do not remove the most productive people. You keep them because you want the business to go on and you might eliminate whole departments where you are investing.

For example, Meta could be investing in the metaverse, they may say we are going to postpone and cut the budget and so the whole department will go. They could remove the recruiters because they got too many recruiters, they could remove overheads because they believe that has too many people. It all depends on how the corporation is configured, it is not necessary that the hardest working, most productive people are laid off.

Corporations know what they are doing, some of them take drastic actions but that is not the norm. So I would suggest that you have to be competitive. Let me tell you one thing, honestly there is no fairness, unfairness in the marketplace. It is economics. When you leave a company for a 30% higher salary, is it fair? When the company is not doing well, they run out of money, is laying you off fair? There is no fairness. They are going to die anyway and they are laying you off just to survive at least for the remaining people.

So many startups hire more people than necessary, build up the flab. Tthey were all told by many people to raise the money at valuation, spend the money and you are going to get money forever, which I think is stupid and silly. It is not real. Do not believe in that. You have to create value. Valuation is a result of the value creation. Yes valuation can go up to absurd levels once in a while but you have to build value to meet the valuation and you have to have cash in the balance sheet at times to keep going because you never know when things may go wrong.

You have been one of the co-founders of Infosys. How do you think employers should react at a time like this? Do you think employers are once again going to tell employees to go back home as they are also going to be in cost cutting mode?
First of all I am not a co-founder of Infosys. I joined in 94, Infosys was formed in 1982. I was the first CFO but whatever it is, let me explain whenever the economy went bad, at Infosys we cut our salary at the top, we cut the variable compensation at the top for all of us. We took less because we believed in leadership by example. I would like all founders and senior people in startups to cut their compensation, come to a living wage so that they do not have to sack too many people.

Second, we weeded out people who are non-performers. We did that for the simple reason that they are not performing in any way. We have given them too much of time and the third thing we did was to find out which are very high cost resources who could be replaced and we tried to save the maximum number of jobs possible and we build up the cash in the balance sheet to last one-and-a-half, two years and investors used to ask us why do you want Rs 20,000-30,000 crore in the balance sheet? We said we never know when times would be bad and then nobody will give us money.

In the current situation, my advice to all those companies is please be careful when you sack people. First of all, tighten your belts, lead by example and show everybody that you are taking the pain, cut off your big salaries. Senior people have to sacrifice, take care of as many people as possible. Do not sack them. They have all come to you with hope, you promised so much to them. Keep your promise to the maximum extent possible and if nothing happens and you feel it is there and survival of the enterprise is important, then see how to put people on furlough so that you can still have them back and retain very good people.

Why do big companies want people to come to campus? They want them to come because there is a lot of learning for young people, please remember that the workforce in IT service industry is not a very mature workforce, 45-50% of the people have got less than five years experience and they need to talk to people and build up the skills because they will need all the skills and technology and understanding over a period of time.

Human relations are important that is why they are telling them to come to office. Work from home is fine but you have to meet once in a while, maybe once or twice a month to talk to everybody, get to know everybody because team work is critical in technology.

But do you think that IT companies large, medium, smaller ones are going to slow down on hiring because they have not for a while and they have been battling attrition? Is the worst behind us or the worst is yet to come?
My view is very simple – we are going to categorise India in technology and the startups and service players. The service players export 95-96% of revenues. In the global markets when there is a boom, there is hiring as more work comes and in the global market when there is a downturn, and there is a recession, people cut costs, they come to you because you can cut their costs and you can cut their costs. So, we are in both ways. Accept that there is a time lag of two or three quarters between the big companies saying that they are going to cut costs and offshore work and that has been happening for the last 30 years. This has happened this time too.

I am sure more work will come off shore than earlier because people pay too much on site, some of the service companies may hire less for one or two quarters. Second, last year they hired 500,000 people. This year they made a lot of commitments in anticipation of the market going up and down. The growth in the second quarter has been pretty good and in the third quarter none of them have come and said that growth is going to come down. They all said the market is much more unsure but we see our business remains whatever we told you we will do for the rest of the year.

I think that is good news, yes they are becoming cautious, they do not want to add on costs, they want attrition to come down and hopefully attrition will come down, cost will come down, things will remain normal and they will resume hiring possibly in the January, February quarter for the big companies because by that time they will be very sure about next year.

As far as startups are concerned the situation is very different. The startups who have been smart, who have not hired too many people will continue doing well and hiring critical resources. Those who have hired too many people, blowing up money, are going to shed people.

When the new hiring season happens, what is the advice to all of those who will be graduating this year looking for jobs? When they enter the startup world, IT services, will they even be in a position to bargain anything at all?
My advice is very simple. Please believe in yourself, the sun is going to rise in the morning tomorrow, set in the evening, the earth will go round and round. Keep adding to your skill and my advice to every young person for the last 30 years has been the first five years of your life is the time when you add to your skills. AFter college, when you go to the wide world, you have to compete and prove yourself against the best people who joined any company. Once you get a job, please take the job, study, work very hard, build up your skills, compete and demonstrate your performance.

When you are very skilled and in the top 10% of your profession, everybody will hire you and then you can see whether you join the same company or go somewhere else. But for the first three to five years of your life focus on learning and join a company that gives you a top class learning, top class exposure and keep learning outside your office hours.



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