Jobs in the information technology (IT) sector continued to remain under pressure in December 2022 with the IT services sector registering its second sharpest year-on-year drop of 41% in active jobs volume over December 2021. The previous low was a 50% y-o-y drop seen in October 2022.
The IT services sector put out the same volume of active openings as seen in November 2022.
The sector registered its second lowest count over a 24-month period, closing at 70,000 active openings.
With the drop in volume, the sector’s contribution remained below the 50% mark in over 21 months. With a 46% contribution to active jobs, the sector continues to lose its dominating spot in the industry-wise contribution mix, according to data sourced from Xpheno — a specialist staffing firm based out of Bengaluru.
The tech cohort of IT services remained stagnant, while startups recorded a 14% rise in active jobs in December 2022. The software products cohort dropped by 5% over November volumes.
The continuous decline in tech jobs is now raising concerns among HR consultants, who expect the recovery to be prolonged. “The tech sector’s dip in contribution could drive long-term concerns for the tech talent ecosystem. A disrupted talent machinery is a difficult thing to reset for a large scale talent consumer like tech, especially a net job creator like the IT services cohort,” said Anil Ethanur, co-founder at Xpheno.
The hiring in the sector continues to be impacted by rising inflation concerns in local and key client markets for IT companies, and the looming fear of a recession in the US.
Tata Consultancy Services (TCS) on Monday reported a net reduction of 2,197 in the workforce which closed at 613,974 employees as on December 31, 2022. The company is focusing on utilising the excess capacity built up over prior quarters and through investments in organic talent development, it said. While the attrition trended down to 21.3% during the quarter, it still remained on the higher side.
Last month, Accenture’s management had also highlighted a moderate hiring momentum in an earnings call with the analysts. “Accenture expects future additions to be limited given its adequate bench strength and focus on re-skilling existing workforce,” said analysts at Nuvama Institutional Equities (erstwhile Edelweiss Securities).
The IT sector collective of services, products and internet-enabled sectors, put out 124,000 jobs in December 2022, just about half of the 240,000 jobs in November 2022. This is the third-lowest active jobs volume from the IT sector collective in over 28 months. On a month-on-month basis, the IT sector collective registered a 0% rise in volume over November 2022.
However, hiring in non-tech jobs continues to be better. Over the last three quarters, the drop in numbers from the tech sector has been well compensated by the non-tech sectors that continue to put out consistent active job volumes. The non-tech sector jobs contributed to 54% of the overall active jobs in December 2022 compared with 52% in November 2022.
Sectors like BFSI, consulting & professional services, education, media and advertising, manufacturing, health & wellness, infrastructure, telecom and others continue to put out active openings and make up for the drop in numbers from the tech sector. Other sectors like retail, goods & logistics, BPO and consumer services and automotives continue to contribute by adding more active openings. While BFSI active jobs volumes grew by 29% in December 2022, other non-tech sectors showed a 5% growth in volume.
However, the expectation is that the tech hiring volume & velocity will gradually rise and recover to a stabilised high over the early weeks of the new calendar year 2023.
Overall, the December 2022 figures closed 5% higher than November 2022 to keep the positive growth trajectory in the job market. The month closed with an active jobs count of 272,000 as against 260,000 clocked in November 2022. December’s closing figures are the highest count since July 2022. The lowest for the year being 210,000 recorded in September 2022.
On the path to recovery, December 2022 figure nearly matched the volume as seen in July 2022. However, December 2022 figures closed 9% lower on a y-o-y basis, against 300,000 recorded in December 2021.
Despite December 2022’s rise in volume, the current financial year’s average remained below 270,000 active jobs per month. However, with a strong start for calendar year 2022, the monthly average for the year closed 9,000 higher than the full year 2021.