All that Awaits AI and Data Analytics is Job Layoffs, Thanks to the Looming Recession

AI and data analytics industry will be bracing for the fierce global recession impact

Recession is scary. People generally relate this condition or term to mass layoffs, hiring freezes, and other impending global and economic downturns. Earlier in 2020, the global pandemic hit the economy quite hard, which initially led to an economic recession. Thousands of people lost their means to a living, and several others kept dreading the same would happen to them. Several large-scale and small-scale businesses had to shut down their doors amid growing financial crises. Well, the world might witness this dread once again! For weeks now, there have been anticipations that the US economy will likely enter into another round of recession, which might end up affecting the global economic and financial markets. As reported by Wall Street Journal, the CPI calculations revealed that the US consumer inflation accelerated to 9.1% in June, a condition that has not occurred in four decades, and adding to this pressure is the Federal Reserve's aggressive moves to slow down the rapid rise in goods and services prices throughout all markets. Now, amid these tough times tech professionals all over the world are getting wary about how this recession will affect the giant AI and data analytics industry.

Experts say that this impending growth slowdown in the United States is also set to hamper the growth and development momentum of India during the mid-term. Research firm Nomura has reported that based on the Nomura Indian Normalization Index, the marching toward above-normal levels, resulting in the growth in India's GDP by 7.2% in 2022, before being influenced down to 5.4% in 2023. But this 'prolonged mild recession' state in the United States will also slow down India's growth as it has been successfully recovering post-pandemic era.

Now, tech experts believe that Indian tech companies are likely to borrow to meet their working capital requirements. The factor that is making things worse for these companies is that the interest rates are skyrocketing right now! However, there are several other research firms that denote the Indian tech domain will remain untethered and will successfully weather the global recession. As compared to other domains, the tech companies in India have understood the importance of AI, machine learning, and data analytics, which will likely help these firms to stand firm amid recession winds.

Will Dedication to Digital Innovation Protect Tech Companies from Recession?

Based on reports, India's technology services domain is likely to be in a better position to weather a global recession than most other sectors due to their massive investments in digital transformation during the post-pandemic era. Investing in digital innovation technologies like artificial intelligence, edge computing, and machine learning has enabled most companies to cut IT costs, and accelerate several other development projects. So, the sector will most likely not experience the deep impact of a global economic crisis like the one in 2008 and 2009. That being said, IT services are definitely feeling the heat of rising inflation and recession, geopolitical tension between nations, and several other factors. The US recession will definitely have far-reaching consequences on every country, but tech services companies in India are reportedly at a standstill and are already bracing themselves to ride out the recession winds.

Meanwhile, other large-scale Indian business houses are already in debt. As these companies continue to borrow to meet their present needs, this demonstrates that they would find it even more difficult in the future to invest in their growth and development. Banks and financial institutions have already surged interest rates, which also increased the borrowing costs for everyone. A high interest-rate situation will also trigger cash shortages in these companies.

Hiring Freeze and Job Layoffs by Big Tech Industry will Affect Techies

Global tech companies have already declared hiring freezes and potential payoffs for the rest of 2022. Founders and investors of these companies are already preparing for economic downturns and the recession. The situation is even worse for early-stage startups. Big tech companies like Meta, Salesforce, and Google have announced layoffs and stagnant hiring conditions, as they are also preparing for bearish global markets and high-interest rates.

This job slacking is already sending shivers down the spine of techies around the world, including India. These slow hiring initiatives by big tech companies will have far-reaching consequences for the Indian tech industry. Some candidates are even worried that as the US economy will likely suffer more in the upcoming months, companies would start retracting job offers and it would eventually affect their individual careers in the long run.

Bottom Line

It is true that a large-scale crisis like this will hurt everyone. No industry is immune to the effects of a global recession. As the world is plunging deep into another recession slumber, we can only pray that the situation does not adversely impact the existing growth and development initiatives.