In contrast, last fiscal, these companies added 70,000 people, while in FY22, they hired 150,000, stoked by a massive demand for digitisation triggered by Covid-19.
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Since then, a weak macro economy and tapering demand for technology services have cast a pall on the sector, with prospects likely to further weaken after the latest flareup in Israel, experts said. “The top IT majors could end the year with a 2-4% lower headcount at the current rate,” said Sunil C, chief executive of TeamLease Digital.
On Thursday, while announcing its earnings for the second quarter, India’s second-largest IT firm, Infosys, made a rare declaration that it will altogether skip hiring from colleges this year, while industry leader TCS is expected to go slow on fresher hiring.
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Experts are of the view that this recruitment slowdown will have huge ramifications on IT freshers, extending into the next fiscal year as well.
“Around nine lakh engineers graduate every year, and even in the worst case scenario, around two lakh get placed across the IT services sector. These are people outside the tier I colleges. It is these two lakh fresher jobs that will be at risk,” said Kamal Karanth, cofounder of hiring firm Xpheno.
None of the hiring companies that ET spoke to could immediately pinpoint a time when a storied company like Infosys skipped campus hiring.
Seasonally Weak Quarters
“…we will monitor this every quarter, looking at our future production and, accordingly, decide when to go back,” Infosys chief financial officer Nilanjan Roy had said at the earnings conference.
TeamLease Digital’s Sunil pointed out that with the third and fourth quarter being “seasonally weak for IT companies, and given the current demand outlook, we expect the net hiring to remain negative.”
To be sure, the top IT services companies have announced strong deals, but “most of these are (aimed at) driving cost efficiencies, which come with a layer of automation and are, therefore, not human resource intensive,” he added.
The hiring downturn comes close on the heels of what was once a frenetic scramble for jobs at Indian IT firms even just a year ago. In the first half of this fiscal, the top three IT companies have seen a total cumulative drop of over 25,080 employees, shaving off of 2% in terms of total headcount in just six months. In contrast, the cumulative headcount of the top three IT majors alone was 1.18 million at the end of FY23.
Second quarter earnings revealed the fall is steepest for Infosys. The Bengaluru-headquartered company marked a decline in headcount of 4.2% over the last six months. This was followed by TCS, at 1%, and a 2% fall for HCLTech.
Hiring industry executives reckon the outlook in the coming quarters may worsen; further, IT CEOs commentary doesn’t point to any upliftment in sentiment, they noted.
Both Infosys and HCLTech have further slashed their guidance for FY24, which means the top companies will grow at low-single digits – a first in close to two decades for the sector.
Infosys shares were 2.2% down at Rs 1,431.8 apiece on the BSE, while those of TCS and HCLTech rose at the end of trading on Friday.
At the earnings briefing on Thursday, Infosys CEO Salil Parekh said, “We continue to see the overall environment (of) digital transformation programmes and discretionary spend (being) low, and decision making is slow,” adding that deal volumes were still under pressure – the reason for the narrower revenue guidance of 1-2.5% from 1-3.5%.
Beena Parmar in Bengaluru contributed to this story.