This is one of the biggest contractions in hiring companies have witnessed in a single quarter. TCS saw a decline of close to 5,000 in Q1, while Infosys recorded a decline of 3,000. Wipro saw a drop of 1,000, while HCL Tech’s net hiring figures remained largely flat, with a decline of about 150 people.
Hiring in IT firms in Q1 FY21 compared to the March quarter. Source: Q1 result reports.
Low attrition, performance-related layoffs
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While presenting their March-quarter results, all the four IT firms had said there would be a freeze in lateral hiring for the first quarter of the next fiscal year and that fresher on-boarding would be deferred. Lateral hiring refers to recruiting people, mostly experienced hands, particularly in terms of pay, as their previous job
Fresher on-boarding, which usually begins in the April to June quarter, was deferred due to Covid-19. It will start from Q2 onwards and will continue through the year.
Explaining the trend, Pareekh Jain, founder of tech consultancy firm Pareekh Consulting, said: “The June quarter sees high attrition as this is when people go for higher studies and shift to new jobs. But it had come down due to uncertainty around the pandemic,” he explained.
That has also resulted in a slowdown in hiring, he added. For instance, attrition among all IT firms saw a significant decline from the year-ago period. Infosys’ attrition level fell to 11.7 percent in the first quarter from 20.2 percent in the same quarter a year ago. Wipro’s was down 13 percent against 17.6 percent and HCL Tech saw its attrition level decline to 14.6 percent from 17.3 percent in Q1 FY20.
However, all this is voluntary attrition. Though the companies have said there will not be any Covid-related layoffs, performance-related layoffs are set to continue.
Jain expects performance-led attrition to rise 5 percent in FY21, as companies are making appraisals stringent. “By now, the appraisal process should be over and that is also reflecting in the decline in headcount,” he added.
What lies ahead?
So, how will future recruitment shape up? Hiring numbers will not be what they were in FY20, concede executives. The last fiscal year saw record hiring by IT firms with TCS alone hiring close to 30,000 freshers.
During the company’s recent press briefing, VV Apparao, HCL Tech’s Chief Human Resources Officer, said: “Hiring depends on two factors: growth and attrition.”
Apparao explained that typically, laterals are hired to replace those who quit the company; however, with attrition declining, lateral hiring would also come down. HCL Tech typically hires 3,500-4,000 laterals per quarter. However it has hired only 2,000 in the first three months of the current financial year.
When it comes to growth, though they have performed well despite the pandemic, IT companies will be cautious. Executives warned that a second wave and frequent lockdowns might impact business.
In a recent interaction with Moneycontrol, V Ramakrishnan, CFO, TCS, said that lateral hiring will be selective and will happen in niche areas. UB Pravin Rao, COO, said during a recent press briefing that the company is looking at hiring niche talent when it comes to laterals, and on a need basis. Infosys hired close to 5,000 laterals in Q1, while Wipro recruited close to 7,000.
Reskilling existing employees in the latest technologies, such as cloud and cybersecurity, will also help companies bridge the talent gap.