The IT services sector put out 33 percent fewer job openings in February 2023 compared to the same period last year, according to the active jobs report of Xpheno. This comes at a time when the sector has seen its net headcount addition slow down significantly in each quarter this fiscal year. Headcount adds are an indicator of demand. Amid a challenging macroeconomic climate, clients are focussed on cost optimisation and are curtailing their IT spends.
According to the report, the active jobs demand in the sector — at 75,000 available jobs — saw an uptick of 15 percent month-on-month (MoM), primarily because of the low base in January 2023 when 65,000 jobs were available.
The internet-enabled services and start-up segments had 17,000 job openings at the end of February, as against 15,000 in January 2023.
According to the report, the IT sector’s share of available jobs has continued to trend downward. The share of the sector, which used to be the dominant recruiter, has gone from 80 percent of available jobs in 2021 to below 50 percent in the last five months, and the share of non-tech sectors have continued to rise.
The sector saw record-low job openings in October 2022, post which there has been an uptick. “The IT sector's February 2023 active jobs volume closed at 128K compared to 112K in January 2023,” the report said. On a year-on-year (YoY) basis, the active demand was 46 percent lesser.
“With 43 percent share of total active openings in February 2023, the IT sector’s position as the primary recruiter for white collar jobs continued to weaken,” the report said.
Xpheno has projected growth in headcount in the first quarter of FY2024 due to a spike in demand.
Overall, hiring is primarily concentrated around nine major cities. Fifty-eight percent of the job openings — or 1.74 lakh — were in these nine locations only. On a sequential basis, active openings grew the most in Hyderabad and Chennai, followed by Delhi NCR and Mumbai. Bengaluru grew the least.
The era of work-from-home (WFH) and hybrid working is also ebbing slowly, as the number of full-time WFH openings has halved sequentially — from 22,000 in January to 10,000 in February. Full-time hybrid openings also dropped sequentially, from 42,000 to 25,000.
The share of WFH and hybrid openings as a percentage of all openings (IT & non-IT) has dipped to 12 in February compared to 23 percent in January. At 35,000 remote plus hybrid openings, this is the lowest since October 2022.
Xpheno Co-Founder Anil Ethanur said the IT sector had seen three-quarters of low hiring action, and the nature of the sector is such that it can’t be away from hiring for long. Citing the uptick in February, Ethanur said that it’s compensatory and preparatory hiring action by the IT sector.
“Budgeting for hiring and onboarding time, the sector is generating openings for headcount refills in the quarter commencing April 2023,” he explained.
“The nearly-three quarters of hiring decline had to be arrested to avoid disrupting the talent supply ecosystem for the sector. Along with corrective layoffs and lowered fresher hiring, the IT sector is cautiously but surely returning to the market for lateral talent hires.
``While the sector still has a long way to go to return to its heydays of hiring, with the current hiring trajectory, the sector may have the low hiring phase in the rear-view mirror by the end of March 2023,” Ethanur said.
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