Cluj’s IT Sector Faces Turbulent Times Amid Layoffs and Restructuring

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Photo: NTT Data Office Building (Google Places)

Cluj-Napoca is celebrated for its vibrant IT industry and skilled workforce. However, two tech companies, NTT Data Romania and Cognizant Softvision, are at the centre of a stormy period marked by layoffs, voluntary resignations, and allegations of discriminatory employment practices. This turbulence comes against a backdrop of economic uncertainty and a dramatic shift towards remote working, spurred by the global COVID-19 pandemic.

A Wave of Change

Recent reports have revealed that both NTT Data Romania and Cognizant Softvision have initiated a series of layoffs, affecting a significant portion of their workforce. The process, often framed as an invitation to accept voluntary resignations, has been met with criticism from both inside and outside the companies. Affected employees were reportedly offered compensation packages, the details of which have been kept under wraps and are said to vary from person to person.

NTT Data Romania, specifically, has been in the spotlight after internal sources highlighted that approximately 100 out of 160 employees in their EMBEDDED (ETEC) department received invites to one-on-one meetings. These meetings, largely held online, presented employees with the option of voluntary resignation. The company has countered these claims, insisting that only 2% of its workforce was offered such an option, emphasising its commitment to long-term employment relationships and denying any mass layoffs.

The layoffs predominantly target employees on the bench—those not currently active in commercial projects—representing about 70% of the total workforce affected. This move has sparked allegations of unfair treatment, with claims that the selection process was biased, favouring those with connections within the company's management.

Economic Pressures and Industry Shifts

The IT industry in Cluj, like many globally, faces pressures from the high cost of living and employment in the region, alongside a shifting perception regarding hiring prospects. These factors, compounded by the pandemic-induced increase in remote work, present a challenging environment for both employers and employees.

Specifically, the automotive sector, a significant client base for companies like NTT Data Romania, has experienced a downturn, prompting a reevaluation of project commitments and financial forecasts. This sector's instability has led to a strategic reassessment, with NTT Data Romania and Cognizant Softvision reducing their operational costs through workforce adjustments.

In response to the layoffs and the ensuing public discourse, both companies have launched public relations efforts to mitigate the impact. NTT Data Romania, in particular, has been vocal about its plans for future growth and development, despite the current challenges. It stressed the positive flow of personnel within the company, highlighting that the number of new hires significantly outnumbers those leaving or being laid off.

However, the discrepancy between the companies' public statements and the experiences shared by their employees has fuelled a debate over the transparency and ethics of their approach to restructuring. Critics argue that the companies' efforts to maintain a positive public image and shareholder value have overshadowed the welfare and legal rights of their employees.

What does this mean for IT in Cluj?

The current situation in Cluj's IT sector is a microcosm of the broader challenges facing the industry worldwide. Even massive companies, such as Google, Amazon, Meta, Microsoft and IBM navigate the post-pandemic landscape, balancing financial stability with ethical employment practices and transparent communication remains a pressing challenge and have announced significant layoffs dyriung 2023. The coming months will be critical for Cluj's IT industry, as it seeks to adapt to these unprecedented times while maintaining its reputation as a leading tech hub in Eastern Europe.

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