By Ayushman Baruah

The demand for digital talent in India has dipped, at least for the next six months, due to a slowdown in major markets such as the US and the drying up of the funding ecosystem, according to HR experts. While digital skills are typically much sought after, over-hiring in the past and delays in projects are some of the factors weighing in.

Typically, four sets of companies are looking for digital talent – digital natives or startups, IT services companies, global capability centres (GCCs), and traditional companies that are moving online.

“There has been a 60-70% dip in hiring among the digital natives as much of their growth was driven by VCs instead of a strong balance sheet. IT services companies and GCCs have also been impacted due to the slowdown in the US economy and we see a 30-40% dip in hiring demand for digital talent. In traditional companies like Reliance and Tatas, hiring continues albeit at a slow pace,” said Anshuman Das, cofounder and CEO of Careernet.

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Venture funding for the Indian startup ecosystem plummeted by 33% to $6.9 billion in the April-June quarter (Q2) from $10.3 billion in the first quarter (Q1) of this calendar year, according to a report from Tracxn, a data intelligence platform.

HR experts warn of a conservative approach to hiring. “There has been a slowdown in digital hiring in the last 3-4 months. Employers, mainly startups, are skeptical about the current market because of the funding crunches, investors pulling out, and possible recession. The process of hiring has become extremely slow and positions are being kept on hold in some sectors like manufacturing, retail and edtech,” said Santhosh Nair, director and chief operating officer, CIEL HR Services.

“They are taking a lot of time to shortlist the resumes, conducting interviews, and rolling out offers. They are taking extra care in deciding whether to hire the candidate or not, mainly for senior roles where the cost to the company is high,” added Nair.

While well-funded organisations continue to look for talent across digital skills, “some of the early-stage startups have become cautious about hiring and want to optimise existing teams before hiring more talent,” said Nikhil Jaiswal, regional director, Michael Page India.

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Top IT services companies in India have also moderated their hiring in the first quarter. After hiring a record number of employees in Q4 FY22, the top three IT services firms – Tata Consultancy Services (TCS), Infosys and HCL Technologies cumulatively made a net addition of only 37,396 staff in the April-June quarter compared to 68,257 employees in the January-March quarter.

The fears of recession have also resulted in many people being shown the pink slip. According to Crunchbase data, more than 32,000 people have been laid off from the US tech sector in 2022 while in India, about 11,500 people are estimated to have been fired this year. The layoffs in India have been seen mainly in startups across popular sectors like edtech, food tech, and health tech.

To be sure, the long-term demand for digital skills remains strong. “Some companies have opted for a more strategic approach towards hiring as the businesses are undergoing a transition due to global economic cycles. The attrition in the IT industry stands at 18-20% and companies continue to seek top talent skilled in automation technologies, cloud computing, analytics and AI. It is a wait and watch mode for the IT sector while the hiring intention will rise eventually due to a very strong pipeline of national and international contracts,” said Yeshab Giri, chief commercial officer, Staffing & Randstad Technologies, Randstad India.