Changes in Human Resource Strategies in IT Companies! The "No Replacement" Strategy

■ The "No Backfill" Strategy Advancing in the Indian IT Industry

Is "Hire One When One Leaves" Outdated?

In major Indian IT companies, the "no backfill" strategy, where retirees are not replaced, is quietly spreading. This is not just a temporary hiring freeze but a strategic choice to "not hire."

Top Indian IT companies like Wipro, Infosys, and TCS (Tata Consultancy Services) are not immediately replacing retirees but are instead addressing the gap through the reallocation of existing staff, reviewing operations, and automation via AI.

Why is this movement becoming more active now?

■ Why "Not Hiring"? Three Reasons Behind the Trend

1. The Need for Cost Reduction

   • Due to the global economic slowdown, reduced exports from a strong dollar, and inflation, companies are compelled to curb spending. Labor costs account for a significant portion of corporate expenses, and controlling these can help secure profits.

2. Advancements in Automation and AI

   • Tasks previously done manually can now be replaced by AI and RPA (Robotic Process Automation), reducing the number of people needed for the same work.

3. Reallocation and Retraining of Personnel

   • By transferring staff from "teams with surplus capacity" to "departments with manpower shortages," companies can effectively utilize internal resources, cutting the costs and time associated with new hiring.

■ Changes and Impacts on Remaining Employees

The employees on the ground are the most affected by the "no backfill" approach.

• Increased Workload: More cases of teams sharing the workload of one person, resulting in an increase in the workload per person.

• Changes in Evaluation Criteria: A shift towards performance-based evaluation, making it harder to be recognized just for "trying hard."

• Increased Anxiety and Stress: Concerns about whether one's job might be replaced by AI.

■ "Silent Downsizing" Already Happening in Japan

Many might feel that "this is not just an issue in India."

Similar trends have already begun in Japan.

• Early Retirement Programs and Hiring Restrictions by Large Corporations

• Non-renewal or termination of contracts for non-regular employees

• Job Reductions through Digitalization (e.g., automation in accounting and general affairs departments)

Japan, which once operated on the premise of "mass hiring of new graduates + seniority-based promotion + lifetime employment," is now experiencing rapid changes in employment structures.

■ Will Your Job Disappear or Remain?

How should each of us think about the future?

• Acquire skills that are hard to replace

  • Examples: interpersonal negotiation skills, creative proposal abilities, problem identification skills, etc.

• Adopt a perspective of business improvement and efficiency

  • It's important to not just do what you're told, but to have the attitude of proposing "how can we do this better."

• Those who continue to learn will remain

  • There is no guarantee that your current job will exist in five years, so it's necessary to constantly update yourself with new technologies and business knowledge.

■ Learning from India: Future Strategies for Companies

Japanese companies have much to learn from examples in India.

• Reduce unnecessary hiring and create systems to utilize internal talent

• Transition to a "hybrid organization" that balances automation and human resource utilization

• Build a culture that supports employee learning

In fact, companies like Persol, Recruit, and Rakuten in Japan are beginning to adopt such human resource strategies.

■ Conclusion: How to Survive in an Era Without Replacement

The common practice of hiring replacements when someone leaves is coming to an end.

Companies are shifting towards "achieving maximum results with fewer people," and accordingly, flexibility and initiative are required from us as workers.

It's no longer a given that "having a job is normal." In the future, those who have the ability to "create work" and possess "irreplaceable value" may be the ones chosen.

Do you have "irreplaceable value" in your work?

Now is the time to reassess your way of working.

Reference Article