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Modest hiring at IT firms likely in 2023

Headcount at TCS declines in Q3 for first time in last 10 qtrs; Robust employee addition in prior 6 qtrs could be one reason, observe experts

Modest hiring at IT firms likely in 2023

Modest hiring at IT firms likely in 2023

- Attrition came down significantly in Dec qtr

- Domestic IT players only taking up need-based replacement hiring

- Freshers joined in H1 are able to join projects

- Employee utilization ratios improving

- Therefore, pace of hiring is slowing down

Bengaluru: Hiring by Indian IT services companies is expected to remain tepid with lower number of freshers addition in the current calendar year after market leader Tata Consultancy Services (TCS) saw its headcount falling for the first time after more than 10 quarters during the December quarter.

Announcing its third quarter performance, TCS said its total headcount fell by 2,197 employees to 613,974 by end of the December quarter. This came at a time when the attrition dropped marginally to 21.3 per cent from 21.5 per cent earlier. Its quarterly annualised attrition declined by 600 basis points.

According to analysts, the rapid pace of hiring has come to an end for most players after Indian companies has a significant addition of employees in the first half of ongoing financial year.

"TCS indicated that it had hired 7,000 freshers in the quarter taking the total fresher hiring to 42,000 till FY23YTD (year till date). The company indicated that net hiring should be seen in the context of strong hiring in the last six quarters and decline in the same is not an indication of demand slowdown," ICICI Securities wrote in a note.

HR experts are of the opinion that given the layoffs in the startup world and among global technology giants, attrition numbers have come down significantly in October-December quarter.

Therefore, the pace of hiring by the domestic IT players has come down with only replacement hiring happening on need basis. Similarly, freshers joined in first half are able to join projects, improving employee utilization ratios. Owing to these factors, companies are going slow in hiring front amid slowdown fears.

"Our focus over the last few quarters on bringing in fresh talent at scale, training them on new technologies and making them productive is paying off," said Milind Lakkad, chief HR officer at TCS.

Sources in the know said that lateral hiring of employees have frozen to a large extent with only hiring for critical positions going on right now. Similarly, many firms have deferred joining dates of freshers to have a better sync between demand and supply.

"Many IT firms have fired people silently in the last three months as demand environment changes in the market place. Even, joining dates of many freshers has been pushed back many times. This trend is unlikely to change as the industry has hired more people in the first half than it required," said a HR expert who wished not to be named.

Debasis Mohapatra
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