When a high-profile global company announces the tightening of its HR belt and letting go of its employees, we scream all the negative words. We fret and fume. We curse and silently curb the concept of for-profit organizations. Yet as a shareholder of the very same company, we would expect them to be profitable and to pay us hefty dividends.
Layoffs are not a new concept. It’s been around for centuries. Every Industrial Revolution 1.0,2.0,3.0 had seen its painful sight. At the end of some time, we also learned that it was not the end of humanity. Many impacted individuals and their families suffered the pain - some for the short term, and some for the longer term. So we will continue to learn afresh in the current IR 4.0 world we live in.
Business, as usual
Layoffs are a part of course correction in business. Just as much as hiring newer staff is. A high-profile company like Facebook (parent Meta) or Twitter gets attention when it announces headcount correction. Or in the Indian example, say a Unicorn will face near public damnation for taking its own cost-cutting calls. Let us not bring morality into this.
For example, any global outsourced services, just like technology services companies are vulnerable to global economic cycles. They are dependent on their global clients and have huge pressures on their pricing ability. So if a mid-sized manufacturing client based in rural America sneezes with recessionary worries, it could very well hurt (tech) job prospects in NCR or Bengaluru, or Hyderabad. That’s the globalized situation we are in.
Cutting-edge technology and the digital sector are just evolving. It will come with its own vulnerabilities and challenges. Many newer innovations will be launched, and many of them might fail. Not fail because of the innovativeness, but simply fail the test of right timing the innovation or market adoption. One can be too early or too late to the consumer market. Until that stabilizes, business models will keep changing.
There is no Playbook, yet, to new age businesses. Just as much as we expect the new-age industries to offer far greater valuation multiples than conventional businesses, we should accept that they will and might take unconventional and unprecedented business calls. So in these situations, businesses and their (private) investors alike could take calls to shut the product/product business or to even put it on hold.
The current Indian education system prepares us for being salaried. And preps our minds for monthly cash flows that emerge from salaries. Generations of Indians grew up thinking employment is guaranteed and lifelong - be it from the government or the private industry. That ain’t so. Layoffs are a then-indicator of a situation that needs that decision as an economic or business salve. They are no indicators of the persons taking those calls. And they are no assurance that such calls won’t be taken yet again. And they are not indicators of the future.