Rising rupee continues to dent hiring in IT sector

Written by Vrishti Beniwal | New Delhi, Dec 13 | Updated: Dec 14 2007, 05:58am hrs
As IT and BPO companies grapple with rupee appreciation, experts foresee a slowdown in hiring in early 2008 as well. In 2007, many companies had trimmed down hiring to improve their bottomlines. With no signs of the rupee weakening in the near future, industry observers feel the trend will continue in the coming quarters.

World economy is governed by the dollar. So rupee appreciation will have some impact on hiring plans of exporters in the first quarter of 2008 also. Some companies have already reduced their bench strength and moved to six-day a week system, says Naresh Malhan, managing director, Manpower India.

NS Rajan, national director, human director, Ernst & Young, says, When your revenue gets affected, you alter your plans accordingly, so IT companies will be more conservative while recruiting people as long as the rupee is appreciating.

Human resources comprise the biggest spend by any IT company, with about 60% of the revenues going into wages. Moreover, the cost of hiring an employee is between Rs 10,000-20,000 and about Rs 50,000 is spent on the training of one employee. As the Indian currency moved up 12% in a year, IT firms slowed down hiring to improve margins.

Infosys added only 4,530 employees in the Q2 of this fiscal, against 7,741 people hired in the corresponding period previous fiscal. Satyam added 3,420 associates during the quarter, against 5,065 additions in the same period previous fiscal. HCL Technologies added 3,625 people, against an addition of 3,826 employees in the year ago period.

About two-thirds of the IT-ITeS sector exports are to the US. Anil Roy, associate director, KPMG, says, As rupee appreciation will put pressure on margins, there will be a slowdown and there is no doubt about it. There wont be a complete meltdown, but the recruitment process will certainly continue at a slower rate.