Staffing companies estimate that less than a tenth of the 1.5 million engineers expected to graduate from campuses this summer will find a job placement.
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The unprecedented decline in fresher hiring marks a significant climbdown for a sector that was once regarded as the uber force on college campuses as it hired a record 600,000 freshers at the peak of the technology services boom in fiscal 2022.
As demand for digitisation cooled with the decline of Covid-19 as well as from deepening geopolitical conflicts in Ukraine and Israel, Indian IT providers scaled down fresher hiring to about 250,000 in fiscal 2023, signalling the start of a dramatic downturn in new recruitments.
“Amidst the extended headwinds, we are looking at a second year of low-to-no freshers and entry level hiring action in India,” said Anil Ethanur, co-founder, Xpheno, a specialist IT hiring firm. Earlier, hiring experts had forecast a 50% drop in fresher recruitments during FY24 from the previous year.
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However, “the slow consumption by key talent segments and the flatlining of the active demand have a major impact on fresher intake,” according to Ethanur, whose firm estimates that fresher hiring will drop by 60-65% by the end of this fiscal year.
While top IT companies such as Infosys and Wipro are likely to give campuses a miss for a second year in a row, India’s largest software services firm Tata Consultancy Services (TCS) said it is hiring fewer freshers and will continue to recalibrate lateral hiring. It will focus more on utilising the existing capacity and see how demand plays out.
“The current year’s placement numbers have been impacted due to the non-hiring by IT services companies like TCS, Cognizant, Infosys and Wipro that usually hire in the seventh semester,” said Samuel Rajkumar V, director of Career Development Centre at Vellore Institute of Technology (VIT).
“TCS and Cognizant have initiated the hiring process last month and are likely to do the interviews in February,” he added, while noting that Cognizant and TCS had made over 1,000 offers each last year. “This year the drop could be higher and overall offers have seen a decline of 20%,” according to a VIT official.
To be sure, at the start of the pandemic in 2020-2021, the IT industry had experienced a decline in entry level hiring when only 85,000 employees were onboarded. In the last 12 months, the sector is showing a below-50,000 net addition at the entry level, according to Xpheno data.
The decline in fresher hiring comes at a time when the software services industry is facing its lowest growth in several decades. Leading companies are adopting a more conservative strategy, anticipating a significant decline of 40-60% in overall fresher intake in the financial year 2023-2024, said Krishna Vij, business head, TeamLease Digital.
Further, a bigger impact is likely to be felt by tier 2 colleges, which are entirely dependent on IT services. The offers are estimated to decline by more than half, he added.
“Notably, many prominent recruiters have either scaled down their fresher hiring or opted not to conduct campus visits this year,” Vij said.
“Popular job boards and professional networking portals show openings for freshers and entry level talent in the 40,000-50,000 range,” Ethanur said.
Hiring executives are of the view that “the adoption of remote work and AI-driven reskilling reflects a strategic response to evolving workforce preferences and technological advancements”.
“The economic slowdown and global recession fears have impacted hiring plans, creating concerns within the sector and affecting opportunities for aspiring engineers,” Vij of TeamLease said.
However, analysts are cautiously optimistic of a revival in fortunes in the fiscal year 2025.
ET reported on Monday that the Indian IT sector is showing some green shoots with a 10% increase in hiring intent as of January end. This follows a massive plunge of headcount in the top five companies as they are together reporting a 61,000-plus year-on-year decline in headcount for the October-December period. But these hiring mandates are limited to experienced professionals who are being roped in as replacement hires, experts said.