The dynamics of the job market are profoundly shaped by layoffs, which can present both challenges and opportunities. As Magnus Tuxen, Chief of Strategy at Assiduus, notes, “Layoffs, even by large companies, act as a double-edged sword for the job market.” While larger companies in India show stability, startups face significant hurdles, leading to a surge in available talent. Sandesha Jaitapkar, COO/CHRO at Artha Group, highlights the competitive nature of the current job market and the mental health impact on unemployed individuals. Strategic hiring and robust talent management can help organizations navigate these complexities and emerge more resilient.

Magnus Tuxen, Chief of Strategy at Assiduus, aptly observes, “Layoffs, even by large companies, act as a double-edged sword for the job market. Unlike the global trend, a report by Mettl, suggests a positive outlook for larger companies in India. In 2023, only 22% of Indian companies resorted to layoffs, compared to the global average of 32%. This indicates a certain level of stability in these organizations.”

However, the scenario is quite different for Indian startups, where a funding crunch has led to over 37,260 employees being laid off by more than 130 startups since 2022. This influx of skilled talent presents a short-term advantage for businesses looking to recruit at potentially lower costs. Yet, the broader repercussions of layoffs on employee morale and organizational efficiency cannot be ignored. “Clear communication about the reasons behind layoffs and a focus on a fair process can minimize damage,” notes Tuxen. The loss of experienced personnel and the resulting loss of institutional knowledge can significantly impact an organization’s efficiency and innovation.

Sandesha Jaitapkar, COO/CHRO at Artha Group, echoes these sentiments, highlighting the competitive nature of the current job market.

“The recent trend of layoffs by large, established companies has significant repercussions for the job market and employee morale, and it also brings broader implications for those affected.” Jaitapkar points to a 35% increase in job applications per opening, as reported by LinkedIn, emphasizing the heightened competition and longer unemployment periods for job seekers.

The psychological impact on unemployed individuals is also significant, with research from the American Psychological Association indicating that they are ten times more likely to experience mental health issues such as depression and anxiety. This underscores the need for companies to adopt strategic hiring practices, as illustrated by a McKinsey report stating that 45% of current jobs could be automated with existing technology. Moreover, companies with robust talent management practices outperform their peers by 22% in terms of revenue, according to Harvard Business Review.

Thus, the current trend of layoffs is not devoid of certain benefits on the one hand, and it calls for more prevalent and innovative approaches to talent management, on the other. With proper and effective selection process and appropriate corporate social responsibility towards employees who are let go of their jobs, organizations shall be better placed to face tough times and compete effectively in the future. Adopting such practices can result in the realisation of sustainable business growth and having a stronger employee base, adaptively capable of dealing with the challenges of the contemporary employment landscape.