With hiring patterns, which have been volatile across companies over the past several quarters now, adapting to a non-linear business model, the decline in overall figures is telling. It would not come as a surprise if the industry hires just a little over 1 lakh people this fiscal, and the biggest impact will be on the campus recruits or fresh engineering graduates, as they always constitute the bulk of the new job additions.
The annual net addition of employees by Infosys, for instance, during FY13 has been the companys lowest in the past five years. It had a net intake of 6,694 people compared with 19,174 in FY12. Even during the quarter ended March, the company added just 1,059 employees, the lowest intake in three years, highlighting how Indian IT firms are going slow on fresh hires.
Among its peers, HCL Technologies reduced its staff strength for a second quarter in a row during the January-March period. The Delhi-headquartered firm cut its headcount by 791 people during the quarter, taking the total employee base to 84,403 as of March 2013, compared to 85,194 at the end of the December quarter. Indias largest IT-services exporter Tata Consultancy Services had a net addition of 37,613 employees in FY13 versus 39,969 in FY12, a decline of 2,356 people.
TK Kurien, CEO, IT business, Wipro said, "It (the tepid hiring momentum in Indian IT) will remain this way because as an industry we have a mature process now with increasing automation.
It is mirroring the kind of changes which the manufacturing sector underwent." According to IT-BPO trade body Nasscom, the sector added a net 1,88,300 jobs in FY13. However, for the current fiscal the industry is expected to recruit around 1,30,000-1,50,000 people as some IT companies are still filling up the backlog from last years recruitment.
"Currently, the decline in hiring is more of a clean-up process for the sector. With the whole boom in IT and outsourcing over the last so many years, companies have only focused on linearity and not on production and processes.
The logic was if I had to grow my business 10 times, I need to hire 10 times more. But now, with immense pressure on margins, cost, visa and processes, companies cant afford to hire in bulk," said Sangeeta Lala, senior vice-president and co-founder, TeamLease Services.
With future business appearing thin over the last several quarters, software services firms have seen an increase in the number of non-billable employees warming their seats. Staffing companies point out that during good times companies hired more than capacity, which now shows in their utilisation levels slipping in the last year. "In the current environment it has become absolute necessary for IT companies to utilise unproductive resources," Lala added.
For Infosys, the utilisation rate for FY13 stood at 69.5% including trainees and 73% excluding trainees. For Wipro, net utilisation for 2012-13, excluding trainees, was down 2.5% annually. Recruiters feel that the direct fallout of an expanded bench is a slowdown or a complete halt in fresher hiring as employees with 0-5 years of experience generally form the bulk of this segment.
"The overall hiring forecast has dropped for the IT industry this year and campus hiring will be under pressure the most. During uncertainty, fresher hiring is impacted the most. When companies are not sure of future business, they stop campus hiring first. The 1,80,000 jobs that were created last fiscal also included campus hiring, of which 40,000-50,000 are still without a job," said Amitabh Das, CEO, Vati Consulting, a Bangalore-based recruitment firm.
According to Lala of TeamLease, the current market is unfortunate for engineering freshers looking for a career in IT companies."Super dream for youngsters having first job with a branded company, onsite project in the US and a good package is no more a usual case. The scenario has changed. Freshers who expect to get job in the IT sector should not wait for offers knocking on their doors but rather focus on other sectors," she said.
As mature markets globally struggle to establish stability amid cutbacks by consumers, IT firms have witnessed a sharp drop in growth. According to a senior IT industry executive, "Overall, as an industry, the number of people will increase because the size of the industry will keep increasing, but the rate at which people use to get hired will come down."
"Given that there is a net reduction in the employee headcount for past few quarters, this signals a more muted kind of growth in the near to medium term. This also suggests that the attrition may come down," said Sanjeev Hota, assistant vice-president, research (IT), Sharekhan.