Moneycontrol Pro Panorama | Hiring trouble 

IT companies are shying away from hiring as they are unsure of order flows in a structurally changing environment.

Dear Reader,

A fog of uncertainty is hampering visibility in the Information technology (IT) services sector. IT companies are shying away from hiring as they are unsure of order flows in a structurally changing environment. In a post-earnings call with analysts on November 7, Info Edge's Chief Executive Officer Hitesh Oberoi said that hiring in the IT services sector is not showing any signs of recovery even after several quarters of a slowdown, and even big global capability centres are restricting their recruitment of techies. Info Edge is the parent company of the jobs portal Naukri.

There are no signs of recovery on the ground as companies intend to remove their extra IT headcount before hiring again. Many companies are not even going to campuses this time for recruitment, he told analysts.

During the September quarter, India's largest IT companies -- TCS, Infosys, Wipro, and HCL Tech -- together added 28,836 employees, a drop of 45 percent compared to the 52,842 they added in the previous quarter.

With a war going on in two continents, companies are unsure of the trend going forward. Clients in major markets such as North America, the United Kingdom, and Europe are holding back on their IT spending.

However, there are job openings for engineers from non-tech sectors. Sectors such as engineering, procurement, and construction (EPC), banking, automobile, EV, and GCCs are hiring on account of rapid digitisation and adoption of new technologies. Openings are available for roles in software development, data analytics, cloud computing, cybersecurity, and digital transformation. The only issue is that openings in these sectors are limited, and attrition rates are high. The moment a candidate finds an opening in a mainstream IT company, they jump ship.

Overall, the IT sector will continue to report a hiring squeeze, as they report improvements in productivity, employee utilisation and lower attrition levels.

Sunil C, CEO of TeamLease Digital, attributed the slowdown in hiring to the inability of companies to forecast for the next two to three years. Most of the long-term transformation projects have been broken down into critical small projects which can immediately impact productivity, grow revenue or improve customer experience, which, in effect, means hiring will continue to be subdued or selective. Most of the organisations are continuing to focus on short-term return on investment (ROI) through measures such as cost rationalising, improving utilisation and automation," he said.

Given that IT sector employees are also one of the triggers for growth in automobile and housing sales, besides other sectors, the hiring slowdown can have a lagged impact on the economy.

Claudia Sahm: ‘We do not need a recession, but we may get one’ (republished from the FT)

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