IT services firms saw a record increase in hiring activity for the quarter ended June 30 as they were expecting an influx of projects. However, due to deferrals of projects, employees on bench in Indian IT firms have increased, according to sources.
Bench refers to employees who are not assigned to any project but are on company's payroll.
Sources said that bench strength has seen a rise in the current quarter compared to the last few quarters for major IT firms. (Emails sent to some of the companies on the same did not elicit any response).
An industry source told Moneycontrol that bench strength at a top IT firm shot up to over 10,000 in the current quarter on account of delay in project commencement.
"Due to global and domestic slowdown, some of the projects that were supposed to have started in the current quarter did not happen. So over half of freshers recruited for these projects had to be benched," the source said.
The source further explained that "there have been some deferrals due to lack of skill set in new age technologies as well, since combination of skills that clients are looking for are not available to their satisfaction. This too has contributed to bench".
Rise in bench not worrying yet
However, experts feel there is no need to ring the alarm bells yet and in fact it was probably expected given the rate at which employees were recruited.
If you look at hiring activity for the quarter ending June 2019, TCS gave offer letters to about 30,000 freshers in the first quarter. Close to 40 percent were inducted in the first quarter and the process is on for the rest.
Infosys and Wipro recruited about 8,000 and 6,000 respectively, including campus and lateral hires. HCL Tech made a net addition of close to 6,000 employees for the same quarter.
The bullish hiring was on the back of a robust deals pipeline.
"Current quarter saw more recruitment of freshers since the market sentiments are better. In IT industry, companies are hiring freshers aggressively," said Kris Lakshmikanth, founder, HeadHunters India.
This is after a lull the IT industry witnessed over the last few years. According to Lakshmikanth, the hiring number in a way reflects their confidence in market opportunities and growth.
Pareekh Jain agreed that project deferrals is a risk that companies have to foresee given the macro-economic factors.
"So even if you plan, if there is a delay that would result in unplanned bench. But the outlook is still positive and there is no doubt that overtime companies will be able to reduce it (bench)," he said.