The Great Resignation which turned into a global wave, is receding. “Now, the pendulum has swung the other way,” says Shiv Shivakumar, President (Corporate Strategy & Business Development) at the Aditya Birla Group. People want to hold on to the jobs they have, he explains, citing what he sees around him. The balance of power has shifted from employees to employers and will be more pronounced next year. Earlier this week, Freshdesk laid off 2% of its people and joined other Indian SaaS companies such as Zendesk and Chargebee which had asked people to leave earlier. How did this change happen?
“At the height of the dot com bust, 200,000 jobs were lost. This year, 160,000 jobs have been documented as lost, and in India, at least 40,000 people have lost jobs in the ed-tech sector alone. Add to this is the fact that 2,83,000 start-ups have collapsed the world over,” says Shivakumar. These numbers tell a sordid story which he goes on to explain in greater detail.
Money supply the world over went up during the pandemic because governments launched stimulus programs. As for those who quit their jobs, they still had bills to pay. Most had worked out that there was only so much they needed to maintain a work-life balance. Between the stimulus packages and the start-ups offering gigs with perks such as work-from-home, the Great Resignation was perhaps inevitable.
But money is a complex beast. The reason start-ups could survive in large numbers during the pandemic was because cheap capital was available (read: money at low interest rates). Venture capital and private equity firms were sitting on “gunpowder” to be deployed and it stayed cheap because governments were pumping more of it into the system during the pandemic.
But the thing that is common to people and companies is that they tend to get profligate when there is easy cash available. That is why, over time, everything starts to get expensive as well. Its shows up as inflation. Central banks the world over, be it the Reserve Bank of India (RBI) or the Federal Reserve (the Fed) in the US, are wary when inflation rises. Left uncontrolled, it can collapse economies. That is why central banks walk a tight rope and monitor various indicators such as interest rates so that just the right amount of money floats in the ecosystem. Dealing with the pandemic was tricky for them. But the situation then was such that the system insisted money be released into it.
Towards this end governments borrowed to fund their stimulus programs or simply printed more currency—both of which are bad ideas in the longer term. As Shivakumar puts it, “There are no free lunches.” The outcomes of the calls made then are starting to show as the pandemic recedes.
It shows up in the data on inflation across most economies, India included, and central banks are raising interest rates and have indicated more such moves are on the anvil. This is one way to make money expensive to borrow. A second outcome of higher interest rates is that founders at start-ups have to think harder before hiring talent or expanding.
This explains the brakes on lay-offs and hiring at unicorns such as Freshdesk and other SaaS companies, of which India is now thought of as world’s capital. Tthe hey wooed clients by promising a highly secure environment that could be trusted, and trained people at competitive prices but when the pandemic pushed people into WFH mode, secure access to the internet started to be viewed as a problem. It was inevitable then that global banking majors such as Nomura Holdings, JP Morgan Chase & Co and Barclays begin to cut their exposure to India. Similar narratives have been documented about other American and European majors rethinking their delivery centre operations centreia.
Between such changes, job cuts and start-up implosions, the answers exist to why the Great Resignations are history and people are holding on to jobs.
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