IT hiring unlikely to pick up soon but techies need not lose hope

India’s top four tech companies — Tata Consultancy Services (TCS), Infosys, Wipro and HCL Tech — continued to witness a slowdown in hiring in the October to December 2022 period while attrition moderated across the board.

The four IT firms combined saw a net addition of only 1,940 employees, 93 percent lower than the July to September quarter, in which they saw total headcount rise by 28,836 staffers. While Infosys and HCL Tech hired sharply lower (net), Wipro and TCS saw their workforce decline by the end of the December 2022 quarter.

Experts have pointed to inflation in the US, geopolitical challenges due to the Ukraine war and a slowing Europe economy as the backdrop for the tightening IT budgets. Though TCS expressed concern over the European situation, Chief HR Officer Milind Lakkad said the slowdown in hiring has nothing to do with demand but everything to do with efficiency and the investment that the firm has made.

In fact, he pointed out that on a year-on-year (YoY) basis, the tech giant has grown by 57,000 people, almost 10 percent growth. “We also hired a lot of people last year, close to 200,000, and a lot of talent development over the last three quarters and eventually they are getting deployed in this quarter and thereby increasing the utilisation a bit and efficiency in the organisation and that is causing this headcount to come down. But look at two years together, it will be even,” he said.

Sunil C. CEO, TeamLease Digital, explained that IT companies were cautious in their approach and slowed down hiring by the middle of Q2 itself and the approach further became strong in Q3 added to the fact that this is a weak quarter due to furloughs/holidays.

As of now, firms are pressing the reset mode and re-evaluating hiring plans and spending. “Indian big corporates are being cautious in their spending as well and looking for ways to efficiently utilise the resources available to them” said Aditya Narayan Mishra — Managing Director and CEO of CIEL, HR Services.

TeamLease’s Sunil C said normally, by the end of Q3, there are indications about the hiring plans and preparations start, however, so far he hasn’t seen a definite plan on the IT budgets and the hiring plans. “This situation prompts us to believe that Q4 may definitely be weak. The IT sector normally goes through this cyclical process and we aren’t sure if this situation is going to continue. For now it looks like the recovery will take some time,” he told CNBCTV18.com.

Meanwhile, Ramani Dathi, CFO, TeamLease Services, said the next two quarters for IT will be slow on hiring. Though she expects some pick-up in Q4, it won’t be strong. She added that IT growth in FY23 will be minor or flat versus 35 percent growth in FY22.

Vijay Sivaram, CEO, Quess IT Staffing, also explained that companies are likely to go for only need-based hiring in the near term. He added that a huge number of candidates were brought into organisations at various levels in view of anticipated demand last year (which cannot be compared to this year) and therefore those hires need to be deployed too plus there are freshers, and that’s why the net addition doesn’t look too large.

However, while many companies boast of hiring freshers, it must be noted that campus hiring, one of the primary ways of bringing in entry-level employees, hasn’t been all that great as well. Data cited by TeamLease Digital suggests that campus hiring last year was over four lakh but, this year it might end up at around three lakh.

Staffing experts say while IT may be witnessing a hiring slowdown, all other sectors need techies, which is where they are being absorbed.

“We will have a mixed bag of opportunities in our hands in the foreseeable future. Although the IT industry might undergo a muted hiring outlook in the coming time, a few skill areas that will continue to go steady in hiring are DevOps, cybersecurity, cloud computing, blockchain etc,” Sachin Alug, NLB Services, told CNBCTV18.com.

He added that hiring for tech roles across telecom, banking and financial services and insurance (BFSI) and healthcare are also expected to stay afloat in the tide of layoffs and hiring halts. Similarly, one will see an uptick in manufacturing as well, he said.

According to Alug, the “love-hate relationship” to moonlighting may also continue as short-term and project-based hirings become more prevalent across industries.

Though attrition levels have come down, they still remain well above 21 percent for all the top four tech firms. TeamLease Digital CEO Sunil C has highlighted that companies, both tech and others, will be cautious this time in hiring both on salaries as well as avoiding excess hiring (capacity building).

NLB Services’ Alug said once prey to staggering attrition rates, the IT sector could finally breathe a sigh of relief as the attrition rate came down to 17-18 percent in the last year. “This, may not be the end of the fall as the job market tightens with more layoffs and hiring lulls across major companies.”

He expects the attrition rate to continue dropping in the coming time since employees today have started re-shifting their focus on job security and are majorly deciding to stay put in their organisations.

Meanwhile, TeamLease Digital thinks, there will be tapering of attrition to some extent but it may still hover around 16-18 percent by the end of this year.