The threat of job losses in the Information Technology (IT) and IT enabled Sectors (ITeS) has raised concerns about slowing down of demand for office space as well as residential properties near IT hubs. Experts anticipate that since the IT sector drives office space demand in the country, job cuts could push them to defer their expansion plans. This would, subsequently, slow down absorption in the segment over the next few quarters.
Kris Lakshmikanth, Founder and Chairman, The Headhunters India, shared that over the next 12 months, around one lakh jobs are likely to be lost in the country’s IT/ITeS industry. Automation is considered the primary reason for this and with the unrelenting advancements in technology, this trend is expected to continue.
IT players are choosing to let go off even managerial personnel to cut costs and this would shrink office space absorption in the near future. One lakh job cuts translates into a reduction of eight million sq ft in absorption volumes, considering that per employee space in IT sector is around 80 sq ft.
This could lead to subdued home buying sentiments, especially in IT hubs such as Bangalore, Gurgaon, Chennai, Hyderabad, and Pune. Samantak Das, Chief Economist and National Director, Knight Frank India, avers that sustainable employment and incomes are crucial factors for the housing market, with majority of homebuyers depending on loans. Even the threat of job losses could shake the confidence of buyers and push them into withholding big ticket purchases such as homes.