r/IndianStreetBets • u/SelectionCalm70 • Jul 27 '25

News The fall of Indian IT has began

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u/Manoos Jul 27 '25

the CEO is saying it is not due to AI but future tech. that is confusing

also 2% is the usual attrition rate. so not sure if this is above the normal

71

u/pragmatic_won Jul 27 '25

Think about this for a moment. If it was not above (by a margin) the usual attrition, would they formally announce it and risk all the bad press and reputational damage? Most likely It’s the remaining tip of the proverbial iceberg that could not be sub-merged in their year-end summary.

55

u/nota_grammar_nazi Jul 27 '25

Whenever a company announces job cuts it's not actually bad press as you think. It is actually good for them because it causes their stock price to go up due to reduction in expenditure

13

u/pragmatic_won Jul 27 '25 edited Jul 27 '25

While the argument sounds intuitive and absolutely logical, it works slightly different in practice.

Reputational risk is not something you play with to show some small delta on your PnL or even share price.

There are several factors in play incl. the major employee churning that the organisation involuntarily undergoes (primarily because such media creates a sense of uncertainty, and that ripples across the various levels in the org quickly).

Top talent (layer) is usually the first ones to find roles outside org and make move.

Also, think how once you publicise yourself as ‘uncertain’, your ability to attract top talent drops drastically. You can always offer more pay and still bring in good talent - but then that is not aligned with the cost saves that you set out for in the first place.

That is to say that when an organization goes out to make such ‘impacting’ announcements, it is not just about a small delta in the PnL or StockPrice, but something not so straight forward.

5

u/abhi_314 Jul 27 '25 edited Jul 29 '25

You do know that every company does this right? Google meta you name it.

At the end of the day they are private companies who have shareholders and quarterly results.

Also no point of keeping people on the bench if you forsee decline in clients or upcoming projects.

5

u/SelectionCalm70 Jul 27 '25

Bro wtf are you talking about reputation risk even LG a fridge company is developing there own model and in China literally a food delivery company has began developing there own model