Staffing firm Xpheno predicts that major IT services companies in India are set to drop hiring by as much as 40% in the current fiscal year.
Slowdown across top cos
They are pegged to hire between 50,000 to 100,000 employees during the fiscal year 2023-24, in contrast to the 250,000 employees that these companies hired in the last fiscal.
India’s top five IT companies reported a cumulative drop of 21,838 in net headcount in the first quarter (Q1) of 2023.
This bunch comprises TCS, Infosys, HCLTech, Wipro and Tech Mahindra.
Among these, only TCS reported a headcount addition of around 500 while the other four companies showed a significant fall.
Respite from layoffs
Since mass layoffs conducted by several companies in India and abroad, the worst may now be behind us.
“The good news is that demand for technology still exists but decision-making is slow, and consequently, so is business growth. The environment for layoffs, except those happening because of funding issues in startups, is largely behind us,” said Sangeeta Gupta, senior VP, Nasscom.
However, this now implies that further hiring will take a backseat in company plans, with focus shifting to utilisation of existing capacity instead.
Nitin Bhatt, partner & technology sector leader at EY, said, “Virtually all companies are running reskilling and redeployment initiatives to best utilise existing capacity and align supply with demand.”
40% dip in hiring
Reports showed that even global IT majors like Accenture, Capgemini and Cognizant have shown a reduction in headcount of over 5,000 each during the latest quarter.
Sunil C, chief executive at TeamLease Digital said, “It looks like a washout year for IT services hiring. We expect a 40% dip in net hiring by the sector in the current fiscal, as companies are predominantly focusing on increasing employee utilisation metrics.”
He further predicted the current hiring freeze to continue in the sector with little or no room for improvement.
The decision to withhold fresher hiring could also be due to lack of visibility on the rollout of new projects.
Campus hiring
Out of the usual lot of companies which visit campuses yearly during placement season, this year only Tata Consultancy Services has committed to hire 40,000 for 2023-2024.
India’s second-largest IT services firms, Infosys and Wipro, have not yet approached campuses for placements.
“Infosys did not come to campus last year, and we have little hope that they will come this year too. We have not received any confirmation from them,” said the dean of a well-known engineering institute.
Infosys has maintained that it still has a recruitment target for this year, however it will “see how that plays out with respect to the changes in terms of the demand environment and what we do in terms of the attrition numbers that we are seeing.”
Wipro has pointed to lower attrition at the company, due to which it is using the opportunity to “groom and deploy internal talent where most needed.”
Looking forward
With a slowdown in business activities, hiring will likely focus on niche skills.
Despite a gloomy outlook, the current financial year is expected to generate job prospects for 50,000 to 100,000 individuals.
However, this is a considerable fall from the net hiring of over 250,000 by IT firms in the previous year
Sunil C, chief executive at TeamLease Digital expects this trend to continue.
This, coupled with a lack of visibility on rollout of new projects, is leading to companies withholding fresh mandates for hiring, he added.
