The Great Resignation, which has become a global wave, is receding. “Now the pendulum has swung the other way,” says Shiv Shivakumar, president of corporate strategy and business development at Aditya Birla Group. People want to keep the jobs they have, he explains, citing what he sees around him. The balance of power has shifted from workers to employers and will be more pronounced next year. Earlier this week, Freshdesk laid off 2% of its employees and joined other Indian SaaS companies like Zendesk and Chargebee in asking people to leave early. How did this change come about?
“At the height of the dotcom crisis, 200,000 jobs were lost. This year, 160,000 job losses have been documented, and in India at least 40,000 people have lost their jobs in the ed-tech sector alone. Add to that the fact that 2,83,000 start-ups have failed worldwide,” says Shivakumar. These numbers tell a disgusting story, which he explains in more detail.
Money supply around the world has increased during the pandemic as governments launched stimulus programs. As for those who quit their jobs, they still had bills to pay. Most realized that it was enough for them to maintain a work-life balance. Between stimulus packages and start-ups offering gigs with perks like working from home, the Great Resignation was perhaps inevitable.
But money is a complex beast. The reason startups were able to survive massively during the pandemic was because of the availability of cheap capital (read: money with low interest rates). Venture capital and private equity firms were sitting on “gunpowder” to be deployed and it stayed cheap as governments pumped more of it into the system during the pandemic.
But what people and businesses have in common is that they tend to be extravagant when easy cash is available. Therefore, over time, everything starts to become more expensive. This manifests itself as inflation. Central banks around the world, be it the Reserve Bank of India (RBI) or the Federal Reserve (Fed) in the US, are cautious when inflation rises. Left unchecked, it can lead to the collapse of economies. That’s why central banks walk a tightrope and monitor various metrics such as interest rates to ensure that the right amount of money flows into the ecosystem. Coping with the pandemic has been difficult for them. But the situation then was that the system insisted on letting money into it.
To this end, governments borrowed to finance their stimulus programs or simply printed more currency – both of which are bad ideas in the long run. As Shivakumar put it, “There are no free lunches.” The results of the calls made then are beginning to show as the pandemic recedes.
It shows up in the inflation data in most economies, including India, with central banks raising interest rates and indicating that more such moves are on the anvil. This is one way to make expensive money to borrow. A second effect of higher interest rates is that startup founders have to think more carefully before hiring talent or expanding their business.
This explains the brakes on layoffs and hiring in unicorns like Freshdesk and other SaaS companies of which India is now considered the world capital. Tthe hey courted customers by promising a highly secure environment that could be trusted and trained people at competitive prices, but when the pandemic forced people into WFH mode, secure internet access began to be seen as a problem. It was therefore inevitable that global banking concerns such as Nomura Holdings, JP Morgan Chase & Co and Barclays would begin to reduce their exposure to India. Similar narratives have been documented of other American and European majors rethinking their supply center operations centers.
In between such shifts, layoffs, and startup implosions, there are answers to why Big Quits are history and why people stick to their jobs.
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