Hiring in the IT services sector continues to move in the slow lane as the sector registered its second sharpest year-on-year drop of 39% in active jobs volume over November 2021. The previous low was 50% y-o-y drop in October 2022, versus the same month last year.
With the drop in volume, IT services sector’s contribution remained below 30% mark in over 21 months. In a more worrying trend, with a 27% contribution, the sector continues to lose its dominating spot in the industry wise contribution mix.
However, month-on-month, the sector registered some positive momentum arresting its seven months’ slide in volumes. Tech sector’s collective volume grew by 18% over October 2022.
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According to Bengaluru-based specialist staffing firm, Xpheno which tracks this data, while IT services sector put out 17% more openings compared to October 2022, it registered its second lowest count over a 24 month period, closing at 70,000 active openings.
The hiring in the sector continues to be impacted by rising inflation concerns in local and key client markets for IT companies, and the marginal recovery in count registered in November is part of the moderation in play.
“Amid macro uncertainties, clients are turning cautious, leading to a slower pace of spending, delay in decision-making and pause in smaller deals – this would constrain the near-term growth trajectory,” according to a report by domestic brokerage Emkay Global Financial Services.
In a recent earnings call with analysts, Accenture’s management highlighted , that wage inflation remains higher.
While the broader trend from IT companies on hiring will become clear in the next few weeks as the earnings announcements start, Accenture’s comments may provide some indication.
“Accenture expects future additions to be limited given its adequate bench strength and focus on re-skilling existing workforce,” said analysts at Nuvama Institutional Equities (erstwhile Edelweiss Securities).
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While, the tech hiring is slowing down, some of the non-tech hiring has gained pace. Data shows that non-tech sectors are leading their contribution in the active jobs with 52%.
“As tech hiring remains subdued, the domestic jobs market has found an alternative equilibrium with more non-tech sectors firing up their hiring engines. While global big tech players and their counterparts continue to rock the boat with layoffs and hiring freeze, Indian IT majors and cohorts are not entirely following suit. The marginal recovery and return of hiring action among the Indian tech cohorts is a sign of returning to moderated pre-Covid levels of action,” said Anil Ethanur, co-founder, Xpheno.
Still, with IT hiring carrying the majority weight in the job market, the overall hiring continues to remain slow paced with November 2022 figures closing 16% higher than October 2022. The month closed with an active jobs count of 260,000 as against 225,000 clocked in October. November’s closing figures are the third lowest monthly count since January 2022. The lowest for the year being 210,00 recorded in September 2022.
Hiring activity in India seems to have hit a pause as weak macro-economic environment led by recessionary concerns in the United States and the prolonged Russia-Ukraine war made companies cautious towards adding more staff.
The job market in the country is expected to face a hiring winter over the next 6-12 months, with the slowdown primarily driven by IT service companies, which form 30-40% of the workforce. Also, the recovery in pace is likely to be prolonged, as hiring decisions get delayed and reports of some fresher letters getting revoked last month.