IT cos set to resume hiring from Q2FY25

It is likely that we are nearing the end of this (fall in employee count) trend. It is possible, we may see another quarter of this and then see employment starting to grow. The impact of GenAI is yet to be seen on employment - Peter Bendor Samuel, CEO, Everest Group, tells Bizz Buzz

Bengaluru: Indian IT services companies are likely to start hiring of both freshers and laterals from second quarter onwards despite last fiscal year proved to be a washout year with large firms shedding employees count in big numbers.

Data from the recently announced Q4 results of top Indian IT firms including Tata Consultancy Services, Infosys and Wipro showed that these firms all together saw employee count plunging by 63,759 in the last fiscal year (FY24). In Q4 alone, TCS, Infosys and Wipro shed 13,362 employees owing to a tough demand environment.

However, experts opined that the fall in headcount seen in the Indian IT industry has bottomed out and most firms are likely to start hiring from the second quarter of ongoing fiscal year. They also said that despite increasing usage of generative AI in various areas, it’s unlikely to disrupt the labour market in a significant way.

“It is likely that we are nearing the end of this (fall in employee count) trend. It is possible, we may see another quarter of this and then see employment starting to grow. The impact of GenAI has yet to be seen on employment and the overall impact moving forward is uncertain. It is clear that GenAI is a powerful tool and will enable increased productivity. However, it is also likely that this will also stimulate greater demand which will more than offset the loss of jobs due to the productivity gains,” Peter Bendor Samuel, CEO of global consultancy firm, Everest Group, told Bizz Buzz.

He, however, said that the correlation between revenue growth and headcount is receding, albeit slowly as GenAI improves productivity.

“Yes (the correlation is decreasing) but it is slow. Gen AI looks to accelerate this and currently offers between 8-12 per cent productivity gains. This could improve to more than 30 per cent as the technology matures and firms learn how to deploy it,” Bendor Samuel added.

During the just-concluded Q4 results, divergence in management commentaries has been seen. While TCS has started fresher hiring, Wipro is focused on onboarding those freshers who have been given offer letters earlier. Infosys said its hiring model has changed in recent years with half of the candidates getting hired outside of campuses.

“There is a lot of buzz in the campuses as we visit campuses this year. Our all India National Qualifier Test has also begun,” Chief HR Officer of TCS, Milind Lakkad has said during post results press conference.

However, all three companies have indicated that there is scope for improving employee utilisation levels. “Hiring will depend on employee utilisation levels and overall demand environment,” Chief Financial Officer of Infosys, Jayesh Sanghrajka has said.