IT hiring hits slow lane on slowdown fears
Lowest net addition likely in June qtr as fears of US slipping into recession weigh
image for illustrative purpose
IT On Cautious Note
l TCS added 14,136 employees in Q1 of FY23
l But it's lower than hiring of 35,209 techies in Q4 of FY22
l TCS hired 24,000 in Q4 of FY21
l Similarly, hiring activity slowing down at HCT Tech, other IT firms
l However, avg attrition rate still over 20%
If you see, attrition numbers are up, but IT companies are not resorting to hiring more employees. It indicates confidence is coming down on demand environment, said Pareekh Jain, an IT outsourcing advisor & founder, Pareekh Consulting
Bengaluru: After adding record number of employees in the last two quarters, Indian IT firms are likely to see their lowest net addition number of staffers in April-June period. Experts are of the opinion that despite high attrition numbers reported by IT firms, most had not pursued aggressive hiring strategy as done by them in earlier quarters. This indicates that the confidence on demand environment is slowly coming down among IT firms, resorting to cautious hiring.
"If you see, attrition numbers are up, but IT companies are not resorting to hiring more employees. It indicates confidence is coming down on demand environment," said Pareekh Jain, an IT outsourcing advisor & founder, Pareekh Consulting.
In the quarter ended June, TCS added 14,136 employees in the first quarter of FY23, taking its headcount to over 6 lakh. However, the net addition number was lower than the preceding quarter and also the same period last year. In Q4 of FY23, TCS added 35,209 employees, the highest ever net addition in a quarter. In the same period of last fiscal, the net addition numbers were at 24,000. During this period, the market leader's attrition rose to 19.7 per cent on the last twelve months' basis in Q1 of FY23, while it was at 17.4 per cent in the preceding quarter.
Similarly, Noida-headquartered IT major HCL Technologies added 2,089 employees in the first quarter ended June 30, 2022. This is significantly lower than over 11,000 employees in the last quarter and around 7,522 employees in the first quarter of last fiscal. This was despite the fact that the attrition rate for the quarter stood at 23.8 per cent on the last twelve months (LTM) basis, up from 21.9 per cent reported in the preceding quarter.
Apparao VV, Chief Human Resource Officer, HCL Technologies, said: "We added one per cent headcount QoQ at 2,089. We are focusing on our utilisation. We had a great year in terms of adding headcount, we grew 23.4 per cent and we are utilising that in a better manner."
Similarly, TCS management had said that it would rely on tapping the talent available as demand comes up. The Mumbai-headquartered firm has seen rise in subcontractor cost in the last quarter, a sign that its dependence on outside resources has risen during this period.
However, among mid-tier firms, Mindtree's hiring momentum continued as the company reported a strong set of numbers in Q1 of FY23. However, the management commentary on demand environment in the second half has reflected 'cautious optimism.'
"Most large companies with bulk hiring plans are going slow in adding headcount. Though first quarter has a bit of seasonality with many junior staffers going for higher studies, but the hiring momentum seems to have slowed down. Net addition has always been the early indicator of demand environment," said a HR expert.
Owing to an inflationary environment globally, US is likely to slip to recession towards the end of this year as per many industry watchers. As US contributes more than 50 per cent of most Indian IT firms' revenue, many companies are taking a cautious approach to hiring of new staffers.
