Online gaming likely to see hiring pullbacks; layoffs

economictimes.indiatimes.com:

online gaming industry was on a roll, attracting thousands of new gamers and poised to create lakhs of new jobs. However, stakeholders said the industry now stares at hiring pullbacks and potential layoffs due to the imposition of the 28% goods and services tax.The GST Council's decision, to be implemented from October 1, will not only impact fresh hiring but also lead to job losses, particularly at companies in the early stage of growth, many of which may shut down due to unviable business models as well as the inability to attract investments, they said. “We are likely to see a severe impact on a majority of players, particularly within the MSME segment,” a spokesperson for All India Gaming Federation (AIGF) told ET.

“With the winding up of many MSMEs and startups in the sector, the impact on employment will be severe. This will mean job freezes and layoffs within the surviving players, as revenues and valuations will fall significantly.” AIGF represents over 120 online gaming companies including Mobile Premier League, Gameskraft and Winzo Games. The online gaming industry claims to currently employ over 100,000 people, with various earlier estimates projecting 1.6-4 lakh additional direct and indirect jobs to be created in two-three years across areas such as tech, programming, testing, animation, design, and artistry among others.

That momentum will now be impacted significantly, industry folks said. “It’s not just the tax; it’s the sentiment. Now capital will stay away,” said the founder of an online gaming company who did not want to be named.