IT hiring slows down on fears of possible contraction in H2, attrition rises further

The net additions for IT majors ended lower by a third in volume over the March quarter, while the numbers remained flat on a year-on-year (y-o-y) basis.

IT hiring slows down on fears of possible contraction in H2, attrition rises further
. From April-June, companies hired 55,232 employees, which is less than 82,905 net additions in the preceding March quarter, according to data by Xpheno. (IE)

In early signs of India’s IT sector bracing up for a possible contraction in the second half of the year, hiring volumes and velocity have dropped sequentially across India’s six leading information and technology (IT) companies, in the first quarter ended June 30, 2022. Also, the attrition has increased further for the majority of the companies during the quarter.

The net additions for IT majors ended lower by a third in volume over the March quarter, while the numbers remained flat on a year-on-year (y-o-y) basis. From April-June, companies hired 55,232 employees, which is less than 82,905 net additions in the preceding March quarter, according to data by Xpheno. In the June quarter of last year, companies had hired 51,270 employees.

The top six IT companies include — Tata Consultancy Services (TCS), Infosys, Wipro, HCL Technologies, L&T Infotech and L&T Technology Services.

The tapering down of hiring momentum also comes on the back of record hiring registered by IT companies last year. The companies hired 260,000 people during the financial year 2021-2022 — which is a record 2.75x higher than the 95,000 employees hired, a year ago.

Anil Ethanur, co-founder of Xpheno said, “With most players achieving record headcount growth last financial year, the first quarter’s focus was to retain and refill talent. A continued calibration of hiring volume and velocity should be expected for the current quarter and next, as enterprises wait it out for the funding winter and inflation fears to ease out.”

The June quarter was an important quarter for the Indian IT services sector as elevated inflation continued to impact tech spending in key sectors and major client markets. IT service bellwethers were seen calibrating hiring volume and velocity to tackle headwinds of a potential contraction in the latter half of the year, he added.

Also, high attrition continued across companies with four out of six players registering an increase, despite the threat of a global slowdown. “Despite a corrective slowdown in the market, enterprises continue to tackle rising attrition rates with more opportunities continuing to chase top tech talent,” Ethanur said.

India’s largest software services exporter, TCS recorded its lowest quarterly net additions during the April-June quarter over the last year and a half with a net headcount addition of 14,136, which was a 2.4% sequential increase. The company closed the quarter with a total of 606,331 employees.

While the hiring slowed down, TCS also recorded its highest attrition over three year period of 19.7% in the April-June period, its second highest is 17.4% recorded in January-March 2022.

Infosys recorded a net headcount addition of 21,171, up 6.7% quarter-on-quarter during April-June — the highest in the last year and a half. However, at 28.4%, the company’s attrition is the highest in the last three years, and also the highest among the top six IT companies.

At Wipro, the company had 15,146 net headcount additions during April-June, its highest quarterly net additions in the last three years, and a 6.2% rise on a sequential basis. However, attrition remained high at Wipro too at 23.3%— the second highest level after 23.8% registered in the March 2022 quarter.

While attrition refills continue to keep enterprises busy, expansion hiring slowed down after over four quarters of buoyancy across IT service bellwethers. “Hiring action is undergoing a near-term calibration as enterprises wait it out for global macro indicators to stabilise,” Ethanur said.

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