In a latest update, the country’s top IT service providers are going slow on hiring mostly affected by the client’s as they cut back spending and defer projects due to macroeconomic challenges.
IT Services Hiring Hit by Waning Demand
The situation seems to be a U-turn from the excesses of the past few years made in anticipation of further growth.
Indian IT majors including Tata Consultancy Services, Infosys and HCLTech have seen employee headcount reducing in the second quarter as they reported weak results.
Going ahead, Infosys and HCL even trimmed their full-year revenue outlook.
While talking on this subject, CEO of U.S. IT advisory HFS Research, Phil Fersht said, “Firms overhired in 2021-2022 in anticipation of further growth this year, which has not materialized, and there is a big emphasis from most service providers to utilize their current workforces.”
There is a slowdown in campus hiring which is the mainstay employee resource of the Indian IT industry which has built its niche on being able to appoint throngs of engineers on various client projects.
This has started impacting in the April-June quarter and has accelerated since, triggering fears of a hit to the economies in the U.S. and UK.
IT Companies Revisiting Their Hiring Plans
Confirming the same, the analysts said that they do not see demand for IT services returning anytime soon.
This is reinforced by muted hiring trends across the top IT firms, as clients cut discretionary spending after the pandemic boom.
In the last two fiscal years, Infosys added over 83,000 employees.
Similarly, TCS’s employee headcount surged by over 120,000 and HCL added about 57,000.
Considering the attrition, Infosys’ net employee headcount has fallen by 14,470 in the first half of this year and HCLTech’s by about 4,800.
During this time, Indian IT major TCS’s net employee reductions stood at 5,810.
It appears that several IT majors have held off, or are revisiting plans on recruiting from colleges and working on improving employee utilization, or the number of billable working hours for an employee.
During the earnings media conference, Infosys chief financial officer Nilanjan Roy said, “In a way we hired ahead of demand predicted … With that slowing down this year, our employee utilization fell. We still have a significant fresher bench with us and room for utilization improvement.”
Further adding that, Infosys is targeting 84%-85% in employee utilization from the current 81.8%.
