Hiring in Indian IT industry to pick up early next year

Weak global outlook and a reduction in discretionary spending by clients are expected to hit the IT industry's hiring, especially for entry-level professionals. Experts believe that IT majors like Tata Consultancy Services (TCS), Infosys, and HCL Technologies' subdued take on hiring signals a tough road ahead for freshers in the near term. However, they predict that tech hiring, especially in certain roles, may pick up by 2024 after a period of lull.

At the Q2 earnings season, the top four Indian IT services companies - TCS, Infosys, Wipro and HCL Technologies - reported a sequential drop in employee count, totalling a staggering 21,000 as the total headcount of the four IT majors put together stands at 1,403,595 at the end of September compared to 1,424,808 last quarter (April-June). 

TCS reported a decline of 6,000 quarter-on-quarter, with an overall staff count of 608,985 at the end of September 2023. However, they have maintained a fresher hiring target of 40,000 for the current fiscal year FY24. The company’s chief human resources officer, Milind Lakkad, stated that the company has not stopped hiring, but the number of new hires is trailing behind the number of people leaving the company, resulting in an overall decrease in count.

HCL Technologies' total employee base dropped by 2,299 to 221,139 at the end of the September 2023 quarter compared to the June quarter, as the company reduced hiring amid a decrease in attrition levels. Meanwhile, Infosys' headcount fell by 7,530 to 328,764 as of September 30, 2023, compared to 336,294 in the June quarter. Infosys, which hired over 50,000 freshers last year, has made it clear that it is not currently recruiting from campuses.

Other large IT services companies are now focused on upskilling them in Gen AI, SAP, and other emerging technologies rather than recruiting new graduates from campuses.

Technology hiring has slowed down in recent quarters, but Tech Mahindra remains committed to re-skilling and upskilling its workforce to create a future-proof talent pool, Kunal Purohit, chief digital services officer at Tech Mahindra told TechCircle. “The company will continue investing in learning tools and platforms with an increased focus on AI, quantum computing, and the metaverse,” he said.

"The industry is facing the continued challenge of talent shortage for new and emerging skills, along with pressure to control costs due to global scenarios. Anticipated trends suggest that the sector may experience a dip and remain muted in hiring at the beginning of the year but is expected to pick up around the middle of the year," said Sekhar Garisa, CEO of staffing firm foundit.

While employers will approach hiring cautiously, selective hiring will still occur as companies are already working on the latest and emerging technologies. The demand for professionals with skills such as AI/ML, cybersecurity, AR/VR, UX/UI, and cloud computing will remain high. Additionally, 43% of companies expressed optimism regarding their hiring outlook in 2024, according to Garisa.

For example, companies are hunting for AI talent despite slowdown in tech hiring. IT firm Tredence said it plans to onboard over 500 people, while SAP Labs India plans to double its AI talent base in the country by 2024. In the June 2023 quarter, Tech Mahindra trained and upskilled around 9,000 employees in generative AI and other AI platforms.

A report published by NLB Services on Friday further showed that hiring in the IT sector may increase by almost 8-10% in Q3 2024. "In Q2, prominent IT corporations reported a sustained decline in attrition rates. However, there has been a reduction in overall headcount within these enterprises,” Sachin Alug, CEO of recruiting firm NLB Services, said.

According to him, with positions opening across a variety of skill domains and seniority levels, the pay scales will vary depending on the skill sets of candidates, market conditions, economic stability, service demand, and a range of other factors. However, we may witness an increase in the salary by 6-8% offered by the IT players in early quarters of next year, he said.

In the coming months, organizations are focusing on expanding their talent pool as they anticipate a demand revival across the industry for 2024-25," said Alag. He added that although it may not reach the hiring levels of previous years, the headcount growth is likely to pick up pace in the early quarters of 2024.

Source: NLB Services October 2023