Resignation: Great resignation was a fraud; I’m not sure about a big layoff trend either! The digitization super cycle has just begun: Manish Sabharwal, Teamlease

“We have 5 million people generating $180 billion in exports. Let’s go to 10 million that will generate $300 billion. Why did the US replace the United Arab Emirates as our largest source of remittances last year? We crossed $100 billion for the first time, but the biggest change is that in the last five years, the gap has narrowed from $46 billion to $23 billion. The digitization super cycle isn’t going into sugar withdrawal, it’s just getting started, he says Manish SabharwalVice president, Leasing team.

What are your thoughts on the job market?
It’s literally the best of times rather than the worst of times now because the structural factors are really moving in India’s favor. We are very lucky thanks to China; We are very lucky thanks to the digitization of Covid. Lots of skills: formalization, industrialization and capital may be reaching critical mass.

But obviously the cyclical fact is that this is the first time I’ve seen the IT industry anticipate a global recession and delay hiring. Everyone keeps saying that their order books are strong, but that their hiring is being frozen early rather than actually frozen. In a sense, this may be the first real-time type of downturn where we anticipate a downturn.

There is a slowdown in start-up funding and there is a bit of a near-term problem in cyclical factors in the labor market. India has advanced factories 10 years. Some of our clients are planning warehouses, distribution and planning to import, they are actually looking for factories and we don’t need to fix all of India.

Remittances crossed $100 billion for the first time with only 20 million people, IT exports will likely hit $300 billion. So 20 big factories around Chennai or Hyderabad or Mumbai could really change this anorexia or manufacturing pain that we’ve had over the last 20 years of reforms where manufacturing hasn’t joined the party. That is real action on the ground. PLI is obviously working, but contracting for manufacturing has just started.

After Covid, there was a real sugar rush. Anything that could be digitized, was digitized and anything and everyone with coding knowledge suddenly from a software engineer became a techie. With the manufacturing renaissance set to hit in 2023, which end of the job market might be the most prominent feature?
In IT because in IT, there are now five different sectors; National Service Companies, International Service Companies, Indian SAS companies operating globally, the Unicorns and Nationals. Obviously all five engines have worked, but I’d be careful to blame digitization for the sugar rush.

The sugar rush was fiscal and monetary policy is still history. It will tell us whether monetary policy is a placebo, a pain reliever, or a steroid. It is definitely not a drug. So the sugar rush of the economy is what is affecting interest rates. We misvalue the increases, but I would say that the super digitization cycle is valid. We have 5 million people generating $180 billion in exports. Let’s go to 10 million that will generate $300 billion. Why did the US replace the United Arab Emirates as our largest source of remittances last year?

We obviously crossed $100 billion for the first time, but the biggest change is that in the last five years, the gap has narrowed from $46 billion to $23 billion. I’d say the digitization super cycle isn’t going into sugar withdrawal, it’s just getting started.

In the US, the trend of big resignations turned into big layoffs. Fortunately, that hasn’t seeped into India, and based on the most recent data, it doesn’t look like that’s going to be the case. Are you worried that we could also see a wave of mass layoffs?
First of all, the great resignation was a fraud. People weren’t resigned to hanging out at home, they were hanging out because there was a shortage in the job market and they were getting better jobs with higher wages. So if there’s one type of fraud trend that we had over the last year, it was the big resignation.

Second, I’m still not sure there’s a big layoff trend because there was $2.3 trillion in excess savings in the US due to fiscal and monetary stimulus. It may have dropped to $1 trillion, but the US economy is still held back by the savings glut that occurred during Covid. But any layoff in the US is good for India. This week here for the headline number of 10,000, there were 30 people on Twitter, Facebook, Meta who were laid off in India.

Cost arbitrage and now with the skill picking up a bit, we’re far over the horizon in skills on any layoffs. In fact, countries are accelerating the development of global captive centers or global service companies such as IBM, Accenture or, of course,

Y .

We have to start to recognize that India has the scale of change costs in technology that China has in manufacturing. It is very difficult to get a factory out of China because of the switching costs. I think there was no big resignation in the US, big layoffs in the US can actually speed up offshoring and offshoring stops making sense in a work-from-home environment because even now in the US In the US, 40% of tech workers are working from home. If you are working for a tech job in San Francisco from Denver, you can do it from Bangalore or Hyderabad.

The other impact to be careful with is that we are trying to lift people out of poverty. They are trying to prevent people from falling into poverty. So let’s be a little careful with the extrapolation. We are very far from the horizon of productivity in our labor markets; 40% of our workforce is close to home (almost without work). So while in the short term. the dilemma of the vote versus the weighing machine is there, for us, the US problems that are causing layoffs are really causing a new price arbitrage which has always been good for India.

What is the outlook in terms of the big hiring trend for 2023? It’s also quite ironic that while we’re seeing a lot of layoffs, hiring is still an issue. Is that due to the dwindling talent pool of promising recruits, as well as the dizzyingly high packages that were dished out?
Yeah, we traded poorly or companies lost focus that shareholders don’t pay salaries, customers pay and when we were getting $73 billion of private equity venture capital, which we got the year before last, that led to skyrocketing salaries. But on average, my view is that I don’t think we have a generation of scarred managers who don’t care about cost. I think there is a revaluation of talent, but it is also leading to innovation. We’re expanding hiring beyond 10 cities, going into non-traditional areas, and hiring non-engineers a lot more than we used to. Women’s participation in the labor force is increasing much faster. It’s still embarrassingly low at 25%, but it was down to 19%.

Hopefully we’ll be back to the 90-91 peak of 31%. My feeling is that internal consumption at the moment and IT are the two engines. So sales, customer service, and logistics are where we see the fastest hires and where the most open positions are.

The interesting part is that it’s not just 50 cities, we probably have employees in 4,000 cities, but our 400 cities are now starting to look like places where there’s demand. So is this the second level, the third level is saving less and consuming more or is there more income? It is still too early to tell, but clearly companies are recognizing that their sales, logistics and customer service footprint cannot be restricted to India’s 52 million-plus cities, but has to reach 400. cities and hopefully that will go to 800 in the next phase.

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