Indian IT cos going for quiet firing now?
After a robust hiring binge since Apr 2021, several factors including margin pressure and uncertainty on demand environment, forcing software firms to go for cost cutting exercise
image for illustrative purpose
Bengaluru: After record hiring of staffers in the last one-and-a-half years, Indian IT industry has started to reduce their headcount through silent firing. Sources in the know said that raising joining standards is being followed to revoke offer letters given to freshers, while the bars of performance appraisal are being raised for staffers with experience.
"Quiet firing has begun by many established players. Given the margin pressure and uncertainty on demand environment, IT firms are keen to reduce wage cost. Around 10 per cent staff rationalisation is expected in coming quarters," said an industry source working with many big IT firms on HR aspects.
Many top technology firms, including Wipro, Infosys and Tech Mahindra, have already revoked offer letters given to students after delaying their joinings by nearly a quarter.
After raising joining standards, these offer letters are being revoked. "Students get offer letters nearly six months before the completion of their degree course. There are standards to be met before final joining like minimum percentage of marks. Some offer letters get revoked for not meeting those standards. But, employers can add additional conditions as and when they wish," said another source.
Last fiscal year, market leader Tata Consultancy Services hired 100,000 fresh engineering graduates and has said that it remained on track to onboard another 40,000 freshers this fiscal year.
On an aggregate basis, top-4 Indian IT services companies- TCS, Infosys, Wipro & HCL Technologies- added 227,000 fresh engineering graduates in the last financial year. Hiring among mid-tier companies also remained robust during this period.
Despite such robust hiring, attrition numbers were more than 20 per cent for most players. This has led to squeezing of margins for most tier-I and tier-II firms. In order to maintain operating margin levels, IT firms are trying to reduce headcount. IT firms like Wipro and Infosys have held back variable pay outs. Wage cost constitutes around 55 per cent of total expenses of Indian IT companies.
Meanwhile, joining dates of fresh engineering graduates are also being pushed to next year in order to defer expenses.
"Uncertain demand environment is prompting IT firms to defer joining dates for new hires. The second quarter earnings will give clarity on this aspect, which will be fair indication about hiring trend in coming quarters," said a Mumbai-based analyst. He, however, added that companies were maintaining no change in demand outlook despite recessionary fears.
