The Indian IT industry is facing a challenging landscape this year due to weak global cues and a decrease in discretionary spending by clients. This situation is expected to have a significant impact on campus recruitment for freshers, with market observers noting that Infosys and HCL Tech’s cautious approach to hiring is a sign of tough times ahead for newcomers in the near term.
Declining Workforce
During the opening week of the Q2 earnings season, leading IT companies like TCS, Infosys, and HCL Technologies reported a notable decline in their employee numbers, totaling a significant reduction of 15,800 employees on a cumulative basis.
The Q2 performance of these tech giants fell short of expectations due to global economic factors such as high inflation, increased interest rates, reduced investment, and geopolitical uncertainties, which have exacerbated concerns in the industry.
Tech companies are reporting that clients are delaying non-critical initiatives and are prioritizing optimization efforts. This trend is likely to continue for the foreseeable future.
While experts around the world suggest that the industry has not yet hit the bottom, Jamie Dimon of JP Morgan has gone so far as to warn that the world is currently facing one of its “most dangerous times in decades.” Meanwhile, Infosys saw its headcount decrease by 7,530 employees, dropping to 328,764 as of September 30, 2023, compared to 336,294 in the June quarter.
Infosys’ revised strategy
Infosys, which hired more than 50,000 freshers last year, has made it clear that it will not be conducting campus recruitment at this time. The company, headquartered in Bengaluru, has also revised its annual sales forecast to a range of 1-2.5 percent, down from the previous projection of 1-3.5 percent, indicating a continued reduction in IT projects amid global macroeconomic uncertainties.
TCS reported a decline of 6,000 employees quarter-on-quarter, with its total staff count at 608,985 at the end of September 2023. However, the company has maintained its fresher hiring target of 40,000 for the current fiscal year, FY24.
Milind Lakkad, Chief Human Resources Officer at TCS, clarified that the company has not ceased hiring; however, the number of new hires is trailing behind the number of people leaving the company, leading to an overall reduction in headcount.
HCL Technologies also witnessed a decrease in its total employee base, with 2,299 fewer employees at the end of the September 2023 quarter compared to the June quarter. This reduction in hiring comes as attrition levels ease.
Krishna Vij, Business Head – IT Staffing at TeamLease Digital, explained that “major Indian IT firms are scaling down campus recruitment due to a weak deal pipeline and recessionary concerns in the US market.” Large IT services companies, having hired many freshers last year, are now concentrating on upskilling them in areas like Gen AI, SAP, and other emerging technologies instead of conducting new campus recruitment.
Sachin Alug, CEO of NLB Services, anticipates a further decline of at least 10-15 percent in campus job offers this year. He noted that as of the first week of October, there has been a more than 20 percent decrease in the number of students placed compared to the same period last year, despite a consistent number of companies participating in the hiring process.
During a Q2 briefing, Infosys CFO Nilanjan Roy explained that the company has a significant number of freshers on the bench and room for increasing utilization. As a result, Infosys is not planning to conduct campus recruitment at this time. However, the company intends to honor all the offers made and will onboard new hires as projects become available.
When asked whether the company plans to visit campuses for hiring this year, Roy stated, “As we see it, I don’t think it is likely that this year, we are going to be going…but we will watch it every quarter.”
HCL Technologies has also adjusted its revenue growth guidance for the full year, projecting a range of 5-6 percent instead of the earlier forecast of 6-8 percent.
(With PTI Inputs)