IT sector to cut entry level hiring in FY24

IT services companies are likely to slash campus and entry level hiring, by as much as 20%, in the coming fiscal as onboarding delays are expected to spillover to the next year, according to recruiting consultants. The expanded bench strength as global recession looms, margin pressures and a dip in utlization is expected to lead to fewer candidates joining at the junior ranks.

“We estimate FY24 fresher hiring to drop by 20% as companies will focus on getting the delayed recruits to start working on client projects. Although some awaiting their joining date may accept offers from mid-tier firms, the smaller companies cannot meet the hiring targets of the large IT service firms,” said Kamal Karanth, co-founder of Xpheno, which specialises in tech hiring.

According to various news reports, campus hiring for the tech firms in FY23 is expected to be 50,000 by Infosys, 30,000 by Wipro, 45,000 by TCS, 15,000 by Tech Mahindra and 45,000 by HCL. However, many of the students are awaiting their joining dates and the delay in many cases has extended more than six months.

The offers were made when companies were optimistic about business after two years of the pandemic.

However, after a year of high salaries, counter offers, zooming attrition, the IT services sector is staring at a crunch in deals as the impact of a slowdown in the US sinks in.

Saran Balasundaram, founder of tech recruitment firm, HanDigital estimates that with the recruitment freeze in product and tech companies, those who want to move away from IT Services, will have few options.

“In FY22 about 4.7 lakh employees were onboarded in the IT and IT Enabled Services (ITeS) sector. In FY23 we estimate 3.5-3.7 lakh but in FY 24, if the recession continues then the numbers will drop. But at best, will be similar to FY23,” said Balasundaram.

The tech firms are on a desperate drive to improve cost efficiency by reducing annual hikes, variable payouts, and going slow on replacement hiring. The firms are reskilling instead of hiring laterally, as manpower utilization in the sector is expected to ebb over the next couple of quarters.

On October3, IANS reported that Wipro, Infosys and Tech Mahindra were revoking offer letters.

Nascent Information Technology Employees Senate, which looks into employee grievances in the tech sector, told Mint that some firms were revoking while few did not send out the offer letter to the candidates.

“We got to know that Wipro has revoked offer letters and Tech Mahindra is yet to send out the offer letters to some of the candidates, who were told they are selected,” said Harpreet Singh Saluja, president of NITES. In September, NITES asked the Ministry of Labour and Employment to look into the onboarding delay at Wipro in absorbing 2,000 campus graduates.

However, tech firms claim that they are onboarding fresh hires in batches.

Wipro accepted that it is onboarding campus recruits in a phased manner. “Wipro can confirm that it will honour all offer letters that have been made to deserving candidates, in a phased manner,” said the company in response to Mint’s queries.

Tata Consultancy Services (TCS) too said they were staggering their campus hires. “It is a normal year for TCS in terms of trainee joining and all our offered trainees are being onboarded in a staggered manner as per our staffing plans, since Q1 FY23. As always, TCS will honour all offers made as part of our campus hiring,” the company said.

While Tech Mahindra did not respond to Mint’s queries; Infosys had earlier said that it has “onboarded a record number of hires” during the past few quarters. The Bengaluru based tech firm maintained that recruitment is client-driven.

“Hiring at Infosys is always aligned to client requirements through the year and, consequently, we spread the joining dates of various batches to align with the changes in project schedules, and to also ensure employees have access to the right training,” it had told Mint last week but did not comment on revoking offers.