The Silent Sack: Unmasking the Layoff Strategy of Indian IT Companies in 2023

In the world of Indian IT services, a new trend is emerging. Employees are finding themselves out of work, not through the usual layoffs, but through a more subtle approach. This method, known as “silent sacking” or “quiet firing,” is becoming increasingly common.

Companies are finding ways to encourage employees to resign voluntarily, thereby avoiding the costs associated with formal layoffs. This includes severance packages, which can be a significant expense. For instance, Microsoft reported a whopping $1.2 billion expense due to layoffs and restructuring in the previous year.

The reasons for quitting are varied. A study by the US-based Pew Research Centre found that low pay, lack of growth opportunities, or feeling disrespected were the main reasons employees quit their jobs in 2021.

The Rise of ‘Quiet Firings’ in India

This trend is not limited to the West. It’s gaining traction in India too. According to Business Standard, the All India IT & ITeS Employees’ Union (AIITEU) reported that around 20,000 tech employees lost their jobs in silent layoffs in the IT/ITeS sector in 2023. These layoffs affected IT services companies of all sizes.

Business conditions often dictate layoffs. For example, Teradata, a cloud analytics and data platform company based in San Diego, let go of about 35-40 employees at its Hyderabad campus last year. This was after letting go of around 1,100 employees globally in 2022.

In 2024 alone, it’s estimated that 2,000-3,000 professionals have lost their jobs among the top Indian IT services companies. Infosys, for instance, reportedly asked many of its employees to resign voluntarily, leading to nearly 200-500 layoffs across campuses in 2024.

Spotting the Signs of ‘Quiet Firing’

So, how can employees identify if they’re being quietly fired? The signs can be subtle. Employees may find themselves burdened with new responsibilities or policies. Their jobs may slowly morph into something they didn’t sign up for, making resignation seem like the only option.

Changes related to work responsibilities, compensation, working conditions, and supervisor communication can all be warning signs. For instance, an employer might reassign important job responsibilities to other employees, demote an employee, or alter their job description.

In terms of compensation, quiet firing tactics can include pay cuts, preventing the employee from earning more by taking on extra work or overtime, or not providing the expected yearly bonuses or raises. Changes in working conditions can also be a sign of quiet firing. This might involve altering work hours or regular shifts, increasing workloads to unmanageable levels, forcing an employee to relocate, or taking away perks such as an office or parking spot.

Communication with supervisors is another critical area where signs of quiet firing can appear. An employee might find that their career trajectory is no longer being discussed, or that they are not receiving performance feedback.

Unfair Evaluations and ‘Ghosting’

Evaluations may become unfair, with excessively harsh feedback or constant criticism of their work. The employee might experience “ghosting,” where meetings are repeatedly cancelled, or they may not be provided with critical information related to their work and responsibilities.

Furthermore, their contributions may not be acknowledged, or worse, credit for their work might be given to others. These warning signs collectively point to a strategy of quiet firing, which can undermine an employee’s position and encourage them to leave voluntarily.

Experts suggest that Indian heritage IT services providers have altered their operating models to ensure every technical employee becomes a billable resource. A billable resource refers to an employee who is assigned to a project for which a client is billed for their work. And for those who aren’t profitable assets, the companies are finding ways of saving costs without attracting attention. This, in essence, is the crux of the silent sack. It’s a trend that’s worth watching, and one that employees should be aware of.