Tough times for staffing cos as hiring slows down

Bengaluru Staffing firms focussed on the IT services sector and startups are facing a tough time finding new business, as both of these segments are currently in a low hiring cycle.

Sources in the know said things are showing no signs of improvement in the second quarter (July-September) after tepid earning growth in April-June period.

“Overall, 2023 is likely to be a bad year for staffing companies, especially operating in technology domain. While both first and second quarters are not great in terms of demand, October-November-December is traditionally a weak period owing to festival and holidays. Also, after startups, now hiring has been very low by the Indian IT services firms. So, 2023 will be a tough year for staffing firm,” said a senior executive in a multi-national HR firm, who wished not to be quoted.

Teamlease Services, which is India’s largest staffing firm, has already reported a lower profit for a third straight quarter owing to a weak demand for its specialised staffing services in the IT industry.

After a record hiring of employees in 2021 and 2022, Indian IT firms have halted new employee addition in recent quarters. Most IT companies reported a fall in their total employee count during the first quarter with attrition trending down.

The top Indian IT majors Tata Consultancy Services, Infosys, Wipro and HCL Tech had hired around 2.2 lakh employees during fiscal 2022 amid rising demand for digitisation triggered by the pandemic. The top four firms hired 82,679 employees in FY23 amid slowdown fears gripping the industry towards the second half of the fiscal year.

“Hiring in the IT sector has been very low in recent quarters. Though selective hiring in certain pockets is happening, this is way below the post-pandemic years,” Supaul Chanda, the global business head of talent engineering firm Otomeyt told the Bizz Buzz. “We don’t see much improvement as next quarter (October-December) is traditionally a low hiring quarter,” he added.

Meanwhile, situation remains grim in the startup world as only a handful of startups are currently hiring for new roles. Most startups have frozen hiring plans till funding situation improves. To optimise cost, more than 20,000 staffers have been fired by these startups in the last one year.

Against this backdrop, staffing companies are struggling to get new mandates from companies for hiring in the technology and startup space. Though hiring in financial services, retail and manufacturing remain healthy, there is no sign of any improvement in the technology sector hiring as of now, experts said.