Large-scale IT layoffs likely to hit realty hard

Hyderabad: The real estate sector in the city and other parts of the two Telugu states, which is limping back to normalcy post disruptive demonetisation phase, is likely to receive another jolt if the software companies go for large-scale layoffs.

Information technology sector which employs over 2.5 lakh directly and thousands of others indirectly in the city is a lifeline for the realty sector not only in Hyderabad, but also in other parts of Andhra Pradesh and Telangana as people from across the two states work in the city’s software sector hotspots.

This high-profile sector seems to be heading for a crisis now with IT biggies resorting to layoffs following curbs on H1-B visas and outsourcing imposed by the Donald Trump-led US government. Widespread automation in software development space has a bearing on the Indian IT jobs too. Conservative estimates put layoffs in the Indian IT sector so far this year at 10,000, including 4,000 in Hyderabad.

A recent study by McKinsey and Company revealed that over 6 lakh IT jobs of the total 13 lakh in the country are at risk over the next three years. “It’s a regular practice among the IT companies to let go five to six per cent of their employees every year on the performance basis. It’s okay for us if that is case this year. However, real estate sector will definitely be impacted adversely if there are large-scale layoffs,” a real estate company chief told The Hans India.

He however could not quantify the extent of drop in real estate business. “This purely depends on the number of layoffs in Hyderabad and other parts of the country. Job losses in other cities also impact us because many from the Telugu states work in all the IT hotspots of the country, including Bengaluru and Pune, but buy houses and apartments in their home states,” he explained.

The adverse impact of large-scale IT layoffs will also be severe on commercial real estate business as the IT sector accounted for 70 per cent of new commercial space absorbed last fiscal. C Shekar Reddy, former national president of Credai, and CMD, ESR Estates Limited, also said that there would be some impact if a large number of IT employees were to be handed pink slips.

“But the sector may be able to withstand the impact as sales growth is likely to come from those employed in other sectors such as manufacturing and government,” he reasoned. Pointing out the interest subsidy announced by the central government on affordable house and smaller home loans, he said measures like 90 per cent withdrawal from PF accounts for housing would give a fillip to the sector. “Economy is also in good stead and clocking decent growth.

That will definitely help the realty,” he said. Reddy is of the firm belief that prices will remain stable and low in Hyderabad real estate market. “Compared to other major cities in the country, property prices are low in the city. That’s the major advantage we have. And the advantage will continue,” he said.

By P Madhusudhan Reddy