The Indian IT industry, known for its rapid growth and employment opportunities, is facing a significant challenge in terms of hiring. Staffing firm Xpheno has forecasted a substantial drop in hiring by major IT services companies, with a predicted decline of up to 40% in the current fiscal year. This shift in hiring trends is expected to impact well-known firms such as TCS, Infosys, HCL, and Tech Mahindra. Let’s delve into the details of this prediction and its potential implications for the IT sector.
Projected Hiring Slowdown
Xpheno’s forecast suggests that during the fiscal year 2023-24, the top Indian IT companies might hire around 50,000 to 100,000 employees, a stark contrast to the 250,000 employees hired in the previous fiscal year. The slowdown in hiring is evident from the first quarter (Q1) of 2023, where the top five IT companies in India reported a cumulative reduction of 21,838 net headcounts.
Differing Performances Among Top Companies
Out of the five major IT companies—TCS, Infosys, HCLTech, Wipro, and Tech Mahindra—TCS was the only one that reported a modest addition of around 500 employees. In contrast, the other four companies saw a significant decline in headcount. This discrepancy reflects the challenges faced by individual companies amidst the shifting landscape of the IT industry.
Changing Landscape and Respite from Layoffs
The IT sector, like many others, has undergone significant changes due to global events. Layoffs, both in India and abroad, had a significant impact on the industry. However, industry experts suggest that the worst of the layoffs might be behind us. Sangeeta Gupta, Senior VP at Nasscom, acknowledges that while business growth has slowed, the demand for technology remains. This indicates that the environment for mass layoffs is largely in the past.
Impact on Hiring and Utilization
Despite the respite from mass layoffs, the focus on hiring is expected to diminish as companies prioritize utilizing existing capacity effectively. Nitin Bhatt, Partner & Technology Sector Leader at EY, highlights that reskilling and redeployment initiatives are being emphasized to align supply with demand.
40% Dip in Hiring: A Challenging Outlook
The IT industry’s slowdown has affected global players as well. Companies like Accenture, Capgemini, and Cognizant have also reported a reduction in their headcounts. Sunil C, Chief Executive at TeamLease Digital, predicts a 40% dip in net hiring by the IT sector in the current fiscal year. He attributes this trend to companies’ focus on improving employee utilization metrics, leading to a hiring freeze.
Campus Hiring and Future Prospects
The usual practice of companies visiting campuses for placements has been disrupted this year. Only Tata Consultancy Services (TCS) has committed to hiring 40,000 individuals for the 2023-2024 period. Infosys and Wipro, two major players in the IT sector, have not yet approached campuses for placements, indicating a more cautious approach.
The Road Ahead
Despite the gloomy outlook, the current fiscal year is expected to generate job prospects for around 50,000 to 100,000 individuals. This projection, while considerably lower than the previous year’s net hiring of 250,000, indicates that the IT industry is still striving to offer employment opportunities. However, the focus is shifting towards niche skills and utilization of existing talent.
The predicted drop in IT hiring underscores the evolving landscape of the industry. While the challenges are evident, the industry continues to adapt and find ways to navigate through uncertain times. As companies focus on optimizing their existing capacity and investing in reskilling initiatives, the Indian IT sector is poised to address the changing demands and opportunities in the technological landscape.
