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Hiring may rise by 10% in 2021 amid 2nd wave of Covid-19

Demand for H-1B visa coming down as clients prefer remote work

Aditya Narayan Mishra, Director, CEO of CIEL HR Services
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Aditya Narayan Mishra, Director, CEO of CIEL HR Services

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The raging second wave of the Covid pandemic is likely to put a temporary break on the hiring process of companies. However, overall hiring in 2021 is expected to be 10 percent higher than 2019 level. This is because of the growth plans of companies for this year. In an exclusive interview with Bizz Buzz, Aditya Narayan Mishra, Director and CEO of CIEL HR Services, said that Indian IT services companies may see reduced dependency on H-1B visa going ahead as clients become more comfortable with the remote model of working. He, however, said that the importance of centres set up near the client sites (known as nearshoring in industry parlance) will not come down despite the increased offshoring

With a raging second wave of Covid, India is reporting more than one lakh Covid cases per day. Despite vaccination drive, partial lockdown measures have been imposed in many places including metro cities like Mumbai, Pune, Bengaluru and many more. Against this backdrop, what is the immediate impact on hiring sentiment across sectors? Will things turn bad after showing improvement from the beginning of this year?

With the second wave rising furiously, some sectors have started getting worried about their plans for the year. Though we do not anticipate large-scale lockdowns and disruptions, this development certainly weakens the sentiments. We can see the impact in the last two weeks in terms of senior leaders in FMCG, engineering, manufacturing and EPC (engineering, procurement and construction) industry discussing and thinking about possible scenarios. The industry leaders may go on a 'wait and watch' mode depending on the evolving situation.

Meanwhile, the new job offers which come up with the requirement of changing place of current residence may face pressure in the coming days. This is because candidates in the mid and senior levels have started to express concern about accepting offers that mandate relocation within the next few months.

The most undesired fallout of this second wave will be a possible decline in investments or tightening of purse strings of the private equity players, which have aggressively infused capital in the Indian startup ecosystem in recent months. Moreover, rising cases are a definite risk to the inflows of FII (foreign institutional investors) capital into the country.

Are you saying that 2021 will be another washout year for hiring like last year or things will be different this year? Some reports suggested that 2021 will be good year from employee addition perspective and hiring are likely to be at par with 2019 level. What is your take on this matter?

As things stand now, 2021 hiring should be higher than 2019 by 10 percent. Had this wave not come, we could have seen growth as high as 15 percent. In effect, we anticipate slight brakes being applied on the growth ambitions of companies. And this is in turn will reflect on the employee addition numbers for this year. But this is again a dynamic situation and will depend on how the pandemic evolves in next months.

The Covid pandemic has led to various interesting working models and 'Work from Anywhere' being one of them. Due to such operating model, the demand for gig workers have seen a significant rise across sectors. Especially, the trend has picked up in the IT services space. Will this trend sustain in the post Covid world as things normalise?

The demand for gig or temporary workers has been rising in past years. This has accelerated during the pandemic period. As companies are adopting to the new operating model, the demand for gig workers on outcome basis is expected to increase. Our estimates show that use of gig workers will continue to rise, growing annually at 25 percent.

Global IT services industry has seen rising pace of offshoring as enterprises become more comfortable with the 'work from anywhere' model. Against this backdrop, will this reduce the requirement for sending engineers to onsite locations like the US? What will be the overall impact on H-1B visa then?

The push for onsite work (work near to client location) has come down from clients during the pandemic period. So, requirements of H-1B visa permits may come down in the post-Covid world as compared to pre-Covid period. This is because enterprises-be it a bank or pharmaceutical company or manufacturing company- are comfortable with new ways of working. So, the clamour of H-1B visa has come down.

If the dependency on H-1B visa comes down, will nearshore centres (centres set up in neighbouring countries of the client's country) lose their relevance?

Setting up nearshore centres in countries like Mexico and Canada has been established over the years. So, due to the increasing acceptance of offshoring, the large companies may not add more people in these centres in the near future, but the importance of nearshore centre will remain. Therefore, aspiring mid-tier or small companies will continue to set up nearshore centres. This is because the CIOs (chief information officers) of clients are used to the nearshore centres, which provide a component of service. I don't see any reversal in this trend due to the pandemic.

Will higher offshoring in IT services reduce dependency on subcontractors in the US market?

This is not likely to happen and around 20-25 percent work in the US of most Indian IT services companies will be through subcontractors. Because, subcontractors are not used for H-1B visa, but is skill-based and it provides a lot of flexibility to IT firms. That is not likely to change.

How was the overall growth of CIEL HR Services in 2020? What are the expansion plans this year?

CIEL has been able to grow by 7.5 percent in 2020-21 as compared to 2019-20 due to the quick moves we made in service segments like edtech, fintech, healthtech, essential products, healthcare, IT services and other sunrise sectors where recruitment and staffing needs were intact.

Debasis Mohapatra
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