No mass layoffs; workforce realignment happens every year: Nasscom

New Delhi: Industry body Nasscom on Friday sought to allay fears of mass layoffs in the Indian IT sector and claimed the industry continues to be a "net hirer" with over 1.5 lakh people being employed on net basis every year.

Stating that the reports of mass layoffs were incorrect, it said workforce realignment, linked to performance appraisal processes, is a regular feature every year.

"Skilling and workforce realignment are essential to remain competitive in international markets. It needs to be appreciated that such workforce realignment is a normal part of the internal process of companies based on their own operational imperatives," Nasscom said in a statement.

It pointed out that no significant changes have been reported or observed this year.

"Such reports are incorrect. In fact the industry continues to be a net hirer with over 1.5 lakh people being employed on a net basis each year, though the focus is shifting from scale to skill," it said.

Over the last few weeks, reports of layoffs across the sector have been making headlines.

IT majors like Wipro, Infosys, Cognizant, and more recently, Tech Mahindra have initiated annual performance reviews, a process that also weeds out bottom performers or non performers. Estimates suggest that thousands of employees in the sector could be shown the door over the next few weeks.

The development comes at a time when Indian IT firms are facing challenges in the business environment and stricter work permit regime in countries like the US, Singapore, Australia and New Zealand.

While the companies have termed these layoffs as part of normal business decisions, many believe these are directed more towards controlling costs.

With the US hardening its stance on outsourcing, IT firms are under pressure to hire locals instead of taking Indian employees on work visas to client sites. This also impacts their margins.

IT companies have been one of the largest recruiters in the country. Apart from the impact of stringent visa regime, increasing automation of processes would also lead to reduction in hiring in coming years.