IT hiring slump likely to ease only in FY25

There is caution among IT services companies in India. Though FY24 is likely to be slump year, positivity will definitely return in FY25. Macroeconomic conditions and the global situations amid two wars coupled with the AI-buzz are making people slightly cautious, but India is in the right place in terms of the growth - Siva Prasad Nanduri, CEO, Diensten Tech, tells Bizz Buzz

• IT hiring to pick up next fiscal year as sentiment improves
• Hiring has been down 50%
• IT firms cautious about adding vacant positions owing to over-hiring done previously
• As demand-supply situation adjusts, hiring sentiment likely to improve

Bengaluru: Amid hiring slump in the $250-billion Indian IT industry, staffing companies are hopeful that sentiment will definitely improve in the next financial year with hiring coming back to pre-pandemic level. Staffing firms working with several domestic and global IT services companies said IT firms are adjusting their workforce, which they have hired last year, to current demand situation. Once such adjustment is achieved, IT firms have to hire employees to man their operations.

“There is caution among IT services companies in India. Though FY24 is likely to be slump year, positivity will definitely return in FY25. Macroeconomic conditions and global situations amid two wars coupled with the AI-buzz are making people slightly cautious, but India is in the right place in terms of the growth. So, over next two quarters, the course correction will happen and the hiring will come back to normalcy in FY25,” Siva Prasad Nanduri, CEO of staffing firm Diensten Tech, told Bizz Buzz.

According to Nanduri, GCCs (global capability centres) remain the growth engines of hiring as these units continue to add employee count, albeit in less number now. However, their headcount addition is better than status quo seen among IT services players.

In the quarter ended September, most big and mid-tier IT firms have reported dip in their employee count with attrition trending down towards pre-pandemic level.

According to reports, hiring by nine out of 10 Indian IT companies fell in the July-September quarter, making it the first time when overall headcount has shrunk in 25 years.

Top four IT firms- Tata Consultancy Service (TCS), Infosys, HCL Tech and Wipro – have cumulatively cut their workforce by about 38,950 employees in the first half of this fiscal.

Meanwhile, the attrition has come down significantly as employee become cautious in changing jobs amid a tough demand environment.

The attrition level of Tata Consultancy Services fell to 14.9 per cent in the second quarter from 17.8 per cent in the previous quarter. Infosys’ attrition stood at 14.6 per cent, a fall of 2.7 percent over the previous quarter. Employee attrition at Wipro also fell considerably to 15.5 per cent during second quarter, a fall of 180 basis points over the past quarter.

With backfilling of positions not being done, sources in the know said IT hiring has reduced to half of what it used to be in previous year.

“Hiring has dropped significantly. If I was to quote a number, assuming that there were ten hires in the normal market, the hiring has dropped about 50 per cent (as of now),” said Nanduri.

He, however, added that once talent supply and project demand situations are adjusted, hiring would pick up.