Indian techies were tripling salaries during the pandemic due to bloated demand for talent.
But the tech sector - especially edutainment - has already begun feeling the pinch amid a global downsizing.
The worst may come next year, a recruitment expert told Insider, who predicts a surge in layoffs in the Spring.
As the world strapped in for the pandemic, closing schools and sending workers home last year, India's techies were having a field day.
Firms in Bengaluru, a tech hub in Southern India with 1.5 million IT employees and once dubbed the "world's back-office," hired willy-nilly, as they struggled to cope with a surge in global demand for digital products.
"Salaries hit the roof," Yeshab Giri, the chief commercial officer at Randstad India, told Insider.
He recalled one applicant who left his job with an annual salary of 1.2 million rupees, or $14,700. The tech worker received five offers from five different companies, and over several months negotiated his yearly pay up to 3.3 million rupees, or $40,400, Giri said. That's almost triple his last paycheck.
To put that into perspective, rent for a one-bedroom apartment in the heart of Indian tech hub Bengaluru costs $1,840 a year, according to data from real estate company NoBroker.
"These weren't one-off cases," said Uddhav Kumar, the co-founder and CEO of Lynkit, a firm that offers inventory and supply chain tracking services to logistics companies. "Everyone who was working would almost be guaranteed to have an offer that was double or triple what he earned."
The skyrocketing demand though, didn't outlive the pandemic.
Like with the US, as COVID-19 measures receded in India, so did the tech boom. Silicon Valley has seen round after round of layoffs in recent months, and India's been feeling the pinch too.
Salary offers are declining, and at least 3,800 employees in Bengaluru were laid off in the last three months, according to data aggregated by Layoffs.fyi.
But India's tech winter has been muted so far, four Bengaluru-based hiring experts told Insider. They see the decline more as the market returning to the brink of normalcy, and said there's still hope for laid-off tech workers - as long as they've been active in their jobs.
'The glory days of last year are over'
Recruiters believe the industry reached its turning point near the end of the third quarter.
"The glory days of last year are over, where everybody and anybody could get a job if they were half-decent," said Anup Menon, the vice president of CIEL HR Services. "In that sense, the average to below-average talent will have things to worry about. It won't be so easy to get a job."
"Companies are now very clear about the budget they have, and will only hire within that range," he added.
By CIEL's estimates, India's IT sector saw a 41% decline in hiring in September, compared to monthly averages in 2022, Menon said. However, he added that companies traditionally also slow down their hiring toward the end of the year.
"If you look at 2018, 2019, these are numbers comparable to those years," he said.
Tech workers, especially those just laid off from well-known companies like Twitter or Stripe, are still looking at a "fairly decent quality pool" of employers, said Menon.
But they'll have to expect fewer perks and lower salaries, he added.
CIEL found that 77% of all tech companies are ending remote work or switching to hybrid work arrangements, compared to 25% of companies who enforced similar policies last year, he said.
Subhashree Ghoshal, a senior consultant at JAC Recruitment India, told Insider that most tech companies engaging in layoffs are mostly looking to trim off excess workers as fewer projects come in - not necessarily their core workforce.
"The major backlash has been faced by employees who have been bench employees," said Ghoshal, referring to employees who aren't actively working on IT projects but are still on the company payroll.
Firms are also looking to hire fresh graduates who are cheaper, while laying off employees who lead small teams like program managers and supervisors, said Ghoshal. Most in the latter category typically have five to 15 years of experience, he said.
'The worst, however, may come next spring'
The worst may come next spring, said Ghoshal, who predicts a surge in layoffs at the start of the first fiscal quarter and at the end of the second as Western demand for outsourced tech workers dwindles.
At Randstad, Giri estimates a 25% drop in hiring in 2023. "We read a lot about the West, experts talking about financial slowdown in the US. We'll have to wait and watch," he said.
For now, most of India's tech firms have shown resilience to market headwinds, faring better than their Silicon Valley peers.
Tata Consultancy Services, an India-based mega firm with 600,000 employees, announced a net income of $1.3 billion in the second quarter of 2022, per Bloomberg. In the same quarter, Infosys, which hires a 345,000-strong workforce, reported a $65.6 million net profit.
In contrast, Twitter reported a net loss of $270 million in the second quarter of this year, while Amazon reported a net loss of $2 billion in the same time frame. Meta reported a 36% net income drop to $6.69 billion in Q2 2022, compared to the same quarter in the previous year.
Menon of CIEL believes demand for tech workers will pick up again in the second quarter of next year, after a "much-needed correction" in the industry. "It was a little too unpredictable with the job hops and the kinds of salaries that were floating around," he said.
Lynkit CEO Kumar concurred. "There was a lot of false hype around things that didn't add value but kept expanding," he said. "I think we are going to see that slowly being weeded out of the ecosystem."
Sectors like edutainment for kids are badly hit
One example of the post-pandemic decline involved digital services for kids, said Lynkit CEO Kumar. With schools shut during the pandemic, parents began buying educational and entertainment, or edutainment, subscriptions to keep their children busy.
"When schools started again, suddenly these kids had no reason to have these subscriptions," he told Insider.
Education startup Byju's, touted as the largest education tech startup in India, spent $2 billion during the pandemic buying up other education firms to boost growth. It suffered a $575 million net loss in the year ending March 2021, per Bloomberg. The company blamed poor macroeconomic conditions, and said it adopted a new revenue recognition model that led it to defer 40% of its revenue to the next few years, Reuters reported.
In October, Byju's laid off 2,500 employees, or around 5% of its total workforce. Byju's did not immediately respond to Insider's request for comment for this story.
Lynkit has been feeling the ripple effects of the third quarter fallout, said Kumar. Its HR department recently received around 1,200 resumes for an open product manager position, a role that normally sees 500 to 600 applications, the CEO said.
Yet compared to the high-profile dismissals in San Francisco, the furloughs in Bengaluru represent smaller proportions of staff let go.
And 2,500 jobs are a mere drop in the total pool of tech workers in India; Giri estimated that a total 350,000 people will join the local IT industry by the end of 2022.
"The layoffs that we're seeing are not really mass layoffs. Large companies laid off about 2,500 people, but we have to understand that they have a base of 50,000 people," Giri said.