India’s job market is set for a hiring winter over the next six to 12 months, as a weak macroeconomic environment led by recessionary concerns in the US and the Russia-Ukraine war turns companies cautious.

Primarily driven by IT service companies, which form nearly 40% of the workforce, the recovery in pace is also likely to be prolonged, as hiring decisions get delayed and amid reports of fresher letters being revoked, HR consultants told FE.

India’s largest software services exporter, Tata Consultancy Services (TCS), recorded 9,840 net additions in the September quarter, a 30% decline on a sequential basis from 14,136 net additions in the quarter ended June. Similarly, Wipro added 605 employees in the three months to September, against 15,446 in the June quarter and 11,457 in the January-March period.

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While highlighting that TCS continues to see strong growth prospects in its deal pipeline, Rajesh Gopinathan, MD & CEO, TCS, recently said the “overall environment needs us to remain vigilant and bears watching”.

“There is an increasing sense of caution that is in the discussions that we sense, however, it has not materialised into our order pipeline and that continues to be the case even now. Will we be completely insulated, very difficult to say, but our intent will be to stay close to the customers and carve out a niche for ourselves, and then minimise the impact of volatility which quite possibly could come in,” he said at a recent earnings press conference.

The KPMG 2022 India CEO Outlook, published on Monday, highlighted that 33% CEOs in India and 39% globally have already implemented a hiring freeze, and 47% CEOs in India are considering downsizing their workforce over the next six months. The anticipated recession may also be pushing businesses to reconsider their strategies, with 50% CEOs in India saying they plan to pause or reduce their digital transformation strategy in the next six months, and 28% have already done so.

“Lot of user industries, be it pharmaceuticals, retail, telecom all over the world are tightening their purse strings and are seen slowing down expenditure on automation projects as companies are unsure of how things will pan out. This is leading to shifting of deadlines by customers, which in turn is making Indian IT companies shift some people to the bench or reallocate them, and slowdown their hiring, back-fills and replacements, delaying hiring decisions,” said Aditya Narayan Mishra, MD & CEO, CIEL HR Services.

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Additionally, the sluggish pace of investments into the startup ecosystem in the last two months has also impacted the hiring momentum.

On an overall basis, active jobs for September closed 20% lower than August, registering the lowest volume in over 16 months. The month closed with an active job count of 210,000 as against 260,000 in August, according to findings by Bengaluru-based specialist staffing firm Xpheno. The drop has created the longest downward slope in hiring action since the pandemic shock in March 2020, it said.

Kamal Karanth, co-founder, Xpheno, said the dips in 2020 and 2021 were knee-jerk market reactions to the pandemic, and the troughs and peaks were quick and sharp V-shaped curves of dip and recovery. “The previous dips and recovery had an end-end timeline of 3-4 months. The current drop in action is the first one driven by macroeconomic conditions and a gradual one that has taken five months to the bottom. The recovery phase, will also be as long as the drop, if not longer. We are hence looking at a broad-based trough and rise, unlike the sharp V curves seen earlier,” he said.

Akhil Gupta, CEO, shine.com, said while it is difficult to predict the extent, hiring momentum will remain affected. Gupta said there is “caution”, but stopped short of calling the hiring environment “bleak”.

“We are seeing a delay in hiring and the velocity of hiring has reduced. However, there is no particular pattern around a particular sector. In IT, companies with large dependence on US are feeling the pressure more, and are seen to be delaying their hiring plans,” he said.

However, Rituparna Chakraborty, co-founder and executive director, TeamLease Services, said demand has exceeded the available supply, and therefore, despite a slowdown in the momentum, the need for talent will not go away.