Fresher hiring in India’s tech sector is clearly slowing down, and the trend is starting to look not temporary. Xpheno, a specialist staffing firm’s study shows that fresher hiring has dropped 11% year-on-year and has stayed flat compared to the previous quarter. This shows companies are consistently pulling back from campus hiring.
“The 4 year period after the hyperhiring phase of FY2022 has registered a significant drop in fresher intakes, with large enterprises staying away from campus action. This trend of not loading the fresher & entry-level layers has driven a structural reset in the tech sector’s org structures,” says Kamala Karanth, Co-founder, Xpheno in an interaction with Financialexpress.com.
The traditional pyramid-shaped enterprise is undergoing a transformation, with its base gradually shrinking. Reduced hiring of fresh graduates has disrupted the future talent pipeline, leading to a greater reliance on costly lateral hires at mid-level positions.
This means that companies are hiring fewer freshers and depending more on experienced hires. This is also being influenced by AI, which is reducing the need for certain entry-level roles.
“As for an AI-driven structural shift, low complexity entry-level roles with rule-based actions are among the first to get impacted by AI. Junior & entry level engineering roles are among the set of roles with high exposure to AI,” Karanth explains to Financialexpress.com
Companies are also beginning to assess the near-term feasibility of deploying AI in these roles. The visible drop in trajectory of fresher intakes, in occupations with high AI exposure, is a fact that points at a potential shift in hiring approach.
Mid-level talent faces squeeze as hiring slows
The pressure is not limited to freshers. Mid-level professionals are also facing challenges, mainly because companies have already hired heavily in the past few years.
“The Indian-tech sector, as we talk, has a big-fat middle layer thanks to the overhiring in 2021 and early 2022. The mid-junior and mid-senior layers spanning from 5 years to 13 years of experience are jointly the broadest by talent volume,” Karanth explains.
The presence of sufficient to excess talent in the middle layers is seen shrinking the need for further hiring. While there is room for experienced mid-career professionals at a sector level and its associated sectors, there is definitely a challenge in fitting more people into active mid-managerial layers.
This means there are already too many professionals in the 5–13 years experience bracket, so companies are not hiring much in this segment right now.
Upskilling becomes key for mid-level managers
With fewer openings and changing job roles, mid-level professionals need to adapt quickly to stay relevant. “The advent of AI and tech enabled non-linear operating models is set to transform the talent pyramid of the Indian IT sector. Like every other sector, mid and senior talent in IT do run the risk of becoming expendable if they do not reinvent and top up themselves with new generation skillsets,” Karanth states in the interaction.
The mid-level managers should undertake upskilling and expansion of capabilities to stay relevant and ahead of the race in the AI-enabled workspace. Investing in evolving durable human skills and competencies powered by AI is key for this layer to stay relevant. So, learning new skills especially those linked to AI and problem-solving is becoming necessary, not optional.
Weak hiring momentum
The overall hiring trend also shows that companies are being careful. Active tech job openings have dropped to around 110,000, down 8% from March. While jobs are still 7% higher than last year, this increase is mainly because last year’s numbers were low.
“The 7% rise… is not significant by absolute volume of growth, Karanth said.Even company-level hiring data shows that firms are mostly replacing employees who leave, rather than expanding teams.“A net QoQ rise of 2,356 implies the enterprise refilled attritioned seats… it does not say much,” Karanth noted.
Tech loses dominance in job creation
Another big shift is that tech is no longer the main driver of jobs in India like it used to be. “The tech sector that once commanded over 80% of all active talent demand… slid down to lose the majority contributor status with 49% in Jan 2023,” Karanth said.
The share dropped further to 38% by mid-2023, which allowed non-tech sectors to take the lead. Since then, the job market has become more balanced between tech and non-tech roles. This could also change how students and job seekers plan their careers.
Global factors add to slowdown
Finally, the slowdown is not only because of AI. Global factors are also playing a big role. “The current slowdown… is largely a tactical slowdown due to sustained headwinds,” Karanth explained.Issues like geopolitical tensions, tariffs, and changes in US visa policies are affecting hiring decisions.
“The Indian techies… are, in the short-term, stepping away from the American dream,” Karanth said. As a result, companies are focusing more on India-based operations like global capability centres. However, shifting work locally is not always easy due to skill gaps and cost differences. Over time, this could still change how the Indian IT sector works and grows.