Companies
IT companies likely to slash campus hiring in FY24
Summary
- Recession fears have already delayed onboarding of freshers, even those hired six months ago.
MUMBAI : The hiring boom in the software services industry during the pandemic is sputtering, with companies likely to slash campus and entry-level hiring by as much as 20% in the year starting 1 April, recruiters said.
With fears of a recession in the US and Europe looming, information technology companies have slowed hiring, delaying the onboarding of even those they had agreed to hire six months ago.
“We estimate FY24 fresher hiring to drop by 20% as companies will focus on getting the delayed recruits to start working on client projects," said Kamal Karanth, co-founder of Xpheno, which specializes in tech hiring. “Although some awaiting their joining dates may accept offers from mid-tier firms, the smaller companies cannot meet the massive hiring targets of the large IT service firms."
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Although the overall market for software developers remains tight, economic indicators in the US and Europe, the top markets for Indian tech companies, are flashing warning signals, prompting Indian outsourcers to temper hiring plans, especially for freshers.
In addition, the expanding number of employees awaiting to be deployed in projects and pressures on company profitability are leading to fewer candidates joining the junior ranks.
In FY23, Infosys Ltd is expected to hire 50,000 from college campuses; Wipro is likely to hire 30,000; Tata Consultancy Services Ltd will absorb 40,000 students; Tech Mahindra Ltd will recruit 15,000 and HCL Technologies Ltd is expected to hire 35,000, according to data collated from news reports. However, many of them have been sent offer letters but are still awaiting their joining dates after more than six months, amid a pullback in economic activity in the US and Europe as central banks declare war on inflation with aggressive interest rate increases.
The offers were made when companies were optimistic about the business outlook before the Russian invasion of Ukraine fanned the flames of global inflation that was already hit by supply-chain bottlenecks because of the pandemic.
After the initial months of the pandemic, IT companies in India sprinted to meet clients’ needs for digitization of their processes to reach out to consumers and remote work for their employees amid lockdowns around the world, creating a huge demand for software developers with such skills and soaring salaries.
However, after a year of high salaries and massive employee turnover, the IT services industry is suddenly staring at a slowdown in deals activity as their clients tighten spending amid rising economic uncertainty.
With the recruitment freeze in product and tech companies, those who want to move away from IT services will have few options, said Saran Balasundaram, founder of the tech recruitment firm, HanDigital.
“In FY22, about 470,000 employees were onboarded in the IT and IT-enabled services sector. In FY23, we estimate 350,000-370,000, but in FY24, if the recession continues, the numbers will drop. But at best, it will be similar to FY23," Balasundaram said.
The tech firms are on a desperate drive to boost cost efficiency by reducing annual hikes and variable payouts and going slow on replacement hiring. Instead, the firms are reskilling employees as workforce utilization is expected to decline over the next couple of quarters.
On 3 October, IANS reported that Wipro, Infosys and Tech Mahindra were rescinding offer letters. Nascent Information Technology Employees Senate (NITES), which looks into employee grievances in the tech sector, said some firms were revoking the letters while few did not send out the offer letter to the candidates.
“We got to know that Wipro has revoked offer letters, and Tech Mahindra is yet to send offer letters to some candidates, who were told they are selected," said Harpreet Singh Saluja, president of NITES. In September, NITES asked the ministry of labour and employment to look into the onboarding delay at Wipro in absorbing 2,000 campus graduates.
However, tech firms claim they are onboarding fresh hires in batches. Wipro said it is onboarding recruits in a phased manner. “Wipro can confirm that it will honour all offer letters that have been made to deserving candidates in a phased manner," said the company in response to Mint’s queries.
TCS, too, said it was staggering their campus hires. While Tech Mahindra did not respond to Mint’s queries, Infosys had earlier said it has “onboarded a record number of hires" in the past few quarters. The tech firm maintained that recruitment is client-driven.
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