During a challenging year, with increasing geopolitical and economic uncertainties in the US and Europe, and as global clients reduce their discretionary spending, Indian information technology (IT) companies may experience a decrease in their workforce for the first time in 25 years in the fiscal year 2025.
In the first six months of the fiscal year 2024, nine of the top 10 IT services companies in India have already witnessed a decline in their workforce.
Indian IT Companies To Witness Decrease In Workforce
The reduction in headcount has been even more pronounced among the top five companies, as they have reduced the hiring of new employees and backfilled attrition.
Furthermore, the current hiring trend indicates a cautious approach, as major IT companies are postponing their campus hiring plans for the fiscal year 2025. Experts suggest that they may only consider recruiting from tech institutes after the fourth quarter of the fiscal year 2024.
In fact, hiring reached an all-time low in the fiscal year 2024.
Infosys Not Conducting Campus Recruitment
For instance, Infosys, a tech giant based in Bengaluru, mentioned during its earnings announcement earlier this month that they are currently not conducting campus recruitment and will make decisions based on future predictions.
On the other hand, HCL Technologies, while confirming its campus recruitment for this year, announced that it will hire only 10,000 freshers, compared to the 27,000 recruited in the previous fiscal year.
The reduced pace of hiring by Tier 1 tech companies, in particular, highlights their lack of confidence in a near-term recovery and their focus on internal fulfillment. This also underscores weak demand and a subdued short-term outlook for the revival of discretionary demand. IT companies are reportedly aiming to improve their margins by reducing subcontractors and minimizing their bench strength.
Loss of 51k Jobs In IT
Between the beginning of the fiscal year 2024 and September, approximately 51,744 jobs were lost in the IT industry. Due to the low-demand environment, there are expectations of increased furloughs in industries such as BFSI, manufacturing, hi-tech, and other sectors.
Notably, the IT industry’s workforce is decreasing even as attrition rates continue to decline and remain significantly below pre-Covid levels.
Nifty IT Index Lagging Behind Benchmark Nifty
Over the past three years, the Nifty IT index has significantly lagged behind the benchmark Nifty, mainly due to macroeconomic uncertainties.
During the last year, TCS shares have yielded a modest return of only 6.6 percent. In contrast, Infosys and HCL Tech have seen negative returns of -10 percent and 22.4 percent, respectively, over the same period.
Meanwhile, Wipro and Tech Mahindra have also shown subdued performance, with returns of -0.1 percent and 4.2 percent, respectively.
