Be it a big company or a medium scale enterprise, companies across the globe are planning to or have already laid off thousands and thousands of employees. Why has this become a trend that doesn’t seem to end any sooner?
The feasible option
Labor costs are the biggest cost of doing any business. It accounts as much as 70% of the overall expense as it includes employee costs like salaries, other benefits, tax-related expenses, and whatnot. Therefore, laying off employees saves big bucks for the companies and does not hamper the business in a big way.
Why hire and hire beyond?
It’s a process. The companies generally approach the mass hiring process when they are in a growing stage to become large scale in nature. When required, some companies plan to fire senior or mid-level employees and hire more freshers as the salary difference helps them save more.
Any effect?
There is no evidence yet but various arguments/studies discuss the various impact on the business after layoffs. Some believe that layoffs mostly help companies with short-term, immediate financial impact while some argue that if and when the business rebounds again, companies would need more hands-on-deck and hiring people back then would be more cost incurring.
Anyone to the rescue?
Start-ups have and are believed to create more jobs in the coming years. A report by National Association of Software and Services Companies (NASSCOM) suggests that the Indian start-up ecosystem has the potential to create 12.5 lakh jobs by 2025. One can hope the start-up ecosystem to be the change we wish to see in the employment world!
Until then, if only companies find other cost-cutting methods to avoid layoffs and save jobs.
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