A Bengaluru-based technology professional was recently laid off. But, he is not worried, not yet. He has shared a detailed post on Reddit to explain why.
The Bangalore techie believes IT workers should think very carefully before buying a house in the city. He also personally considers his decision to stay on rent one of the best he has ever made.
The man was working directly on an AI migration project at a big tech company. He wrote that his net worth was sufficient to comfortably purchase a ₹2 crore house last year. Yet, he chose not to.
Instead, he stayed in a rented place close to his office. He said that his work in AI gave him a realistic sense of what was coming for IT employment over the next few years. Last week, he was laid off. He says he could not be happier about the decision he made about his house.
His central argument is straightforward. Bengaluru’s real estate market, he writes, runs on a cycle that depends almost entirely on IT workers taking on large home loans. That cycle, in his view, is approaching its end.
“Of the IT slaves, 70-80% roughly work in service-based companies. For most of them, their work is directly replaceable by AI tools in the next 1-3 years if the clients wish to,” he wrote.
“But, due to internal knowledge, bureaucracy, etc, it might take 3-5 years for maybe 70% folks. Rest 30% still keep the job because when something goes wrong, you need a human to blame and get support from or to manage the AI agents,” he added.
The Redditor also explained why companies are laying off their employees in the name of artificial intelligence.
“By laying off workers, they get two things. First is positive press coverage that they are able to leverage AI and get more done with fewer workers, second is to improve their balance sheet by cutting down salaries (else Wall Street will punish them for heavy capex),” the Reddit user wrote.
The techie himself was working on an AI project designed to automate the very work he had previously been doing manually.
“As an insider, I can tell you right now the layoffs are mainly because
these companies overhired during the zero-interest COVID cycle. AI is capable of generating good-quality new code but is currently incapable of maintaining the complex systems and fixing complex issues that keep coming in production systems,” he added.
This report is based on user-generated content from social media. LiveMint has not independently verified the claims and does not endorse them.
Property prices in Bengaluru
On property prices in Bengaluru, his view is neither optimistic nor catastrophic. He does not expect Bangalore real estate to crash. It is because Indian homeowners psychologically refuse to sell at a loss. They will hold for years rather than take a discount, he says.
But, he also does not see prices rising, given the large supply of new inventory expected over the next two years. He thinks that the drying up of stable IT demand is also to blame.
He suggests not purchasing a house worth more than 150% of one’s total net worth. He asks people to avoid decisions driven by fear of missing out. They should maintain a sufficient financial cushion to cover EMI payments during a period of unemployment, he advises.
The Reddit user also flags that many units in new projects are bought by brokers and insiders. Those are then sold to buyers at inflated prices near the time of possession. He recommends the resale market as a better hunting ground for genuine value.