Global banking crisis hits Indian IT hiring

Conundrum In Recruitment

- Hiring in banking domain majorly hit

- Net employee count likely to fall in Q4

- Total hiring numbers may reduce by 30-40% in FY24

- Freshers’ intake the worst hit

- BFSI vertical contributes 30% to topline

Bengaluru: Hiring sentiment in the Indian IT sector has become weaker owing to the ongoing banking crisis in the US and Europe as recruitment in the banking domain is getting deferred. HR experts dealing with both Indian and global IT firms said that companies are taking a ‘wait and watch’ approach in terms of hiring for the banking domain as they want to understand the impact of the banking crisis on their revenue growth.

“Hiring sentiment in the IT sector has not improved so far. On quarterly basis, we have not seen much change in this quarter. As far as hiring in banking domains are concerned, companies seem to be on a wait and watch mode,” Supaul Chanda, the global business head of talent engineering firm Otomeyt told Bizz Buzz.

US banking sector has seen the fall of Silicon Valley Bank (SVB) along with fear gripping the possible crisis in many regional banks in the country. This has prompted the US Federal Reserve to remain ready for interventions to avoid any crisis.

In the Europe, beleaguered Credit Suisse Bank would be acquired by Swiss major UBS on the bank of asset quality concerns. Similarly, the shares of German banking major, Deutsche Bank has seen a sharp fall amid fears of banking crisis engulfing European economies.

Analysts tracking the sector have opined that Indian IT firms may see a hit of around 30 basis points (bps) to their revenues owing to the demand slowdown coming from the BFSI (banking, financial services & insurance) vertical. Among the Indian IT firms, companies such as Tata Consultancy Services, Infosys, Wipro, and LTIMindtree have major exposure to regional banks in the US. Apart from this, most large and mid-tier IT firms are executing projects for European banking majors.

“Companies have started evaluating the possible hit to their business if banking sector spend comes down in coming quarters,” said a source. BFSI vertical is the largest vertical for most IT firms with a contribution of more than 30 per cent to their revenues.

Meanwhile, hiring of new employees are likely to be reduced by more than 30 per cent in the next financial year. Most of the manpower addition is likely to be reduced in the freshers’ category in FY24.

While the top four IT firms onboarded around 227,000 fresh engineering graduates through campus placement in FY22, that number was likely to drop to around 155,000 in FY23, according to management commentary of domestic IT firms till third quarter of ongoing financial year.

Global IT firm Accenture has already announced to reduce its total headcount by 19,000 in coming quarters in order to reduce cost. Sources in the know said that net employee count of most IT firms is likely to fall in the fourth quarter, results of which will be announced from next month.

Hiring sentiment in the IT sector has not improved so far. On quarterly basis, we have not seen much change in this quarter. As far as hiring in banking domains are concerned, companies seem to be on a wait and watch mode

- Supaul Chanda, global business head at Otomeyt, tells Bizz Buzz