Contract hiring gaining steam in Indian IT space

Last time, when recovery started after financial crisis, it started with hiring of staffers on contract, which was followed by permanent hiring. Currently, we have seen around 10% uptick in the contract hiring. In the next quarter (July-September), permanent hiring is likely to pick up - Aditya Narayan Mishra, CEO of CIEL HR, tells Bizz Buzz

Bengaluru: Good times for Indian IT industry seem to be on the horizon, especially in the hiring space, as contractual hiring shows an uptick in recent months. According to HR industry experts and industry veterans, rise in contractual hiring of IT engineers is seen as a precursor to demand for permanent posts going up in coming quarters. It also shows that amid uncertain demand situation, IT firms are slowly witnessing some signs of sustainable demand emerging in coming quarters.

“Currently, we are witnessing that open positions are less now than last year by around 5-7 per cent. What we have also seen is that contract engagement has improved a bit. Last time, when recovery started after financial crisis, it started with hiring of staffers on contract, which was followed by permanent hiring. Currently, we have seen around 10 per cent uptick in the contract hiring. In the next quarter (July-September), permanent hiring is likely to pick up. That’s what we are hoping,” Aditya Narayan Mishra, CEO of CIEL HR, told Bizz Buzz.

In the financial year ended March 2024, Indian IT industry saw a sharp fall in total headcount. Large and mid-tier IT firms witnessed their employee count falling by more than 70,000 in FY24. Management of multiple companies had said that hiring was linked to demand environment, which remained tepid in the last fiscal.

While hiring came to a halt, IT firms improved their employee utilisation levels by deploying reserved employees, hired earlier.

In the quarter ended March, Infosys improved its utilisation level to 82 per cent from 76.9 per cent a year earlier. Similarly, Wipro improved its utilisation levels to 84.8 per cent excluding trainees during this period. Market leader, TCS also improved its utilisation levels.

As employee utilisation levels improve, IT firms are keen to start hiring process as their deal pipelines remain strong.

“Deal pipeline of most companies remain strong. IT firms are hopeful that deal conversion will improve in coming quarters. In that case, there will be need for more staffers. So, we should see hiring picking up in coming quarters,” said an industry source.

In the just concluded quarter, though most firms are expecting mid-single digit growth in their revenues, their deal pipelines remain strong. During the fourth quarter, TCS had a deal pipeline worth $13.2 billion, which was at record high. Similarly, Infosys bagged deals worth $4.5 billion during this period. Wipro bagged deals worth $3.6 billion in the fourth quarter.

Such robust deal pipeline necessitates enough project-ready staffers once the demand environment improves.