Why Hiring By IT Firms Dropped In First Half Of This Year

Hiring by IT firms has dropped considerable, as per a new report published by The Economic Times (ET). As per the report, the net employee addition by the top IT service providers has fallen by almost one-fourth in the first two quarters of the current fiscal year. 

Since the next two quarters are also expected to be weak for the software exports industry, especially among weak global cues, these hiring numbers by IT firms are likely to fall by almost half for the full year, ET reports.

While a host of factors can be attributed to this weak hiring numbers or less job opportunities in IT service providers, the main reasons have been given as geopolitical turmoil in Europe and several macroeconomic concerns in the United States (US). Needless to say, in several reports, economists and experts have already predicted crisis amid rising inflation and disturbing world economic conditions. 

The ET report adds that Tata Consultancy Services (TCS), Infosys, Wipro and HCLTech have reported around 81,700 net headcount additions during the first half of this year. This figure is reportedly down almost 24 per cent as during the same time in the previous year, the net hires were 107,616. In addition to this, even the net addition in the July-September quarter has been fewer when compared to the sequential first quarter, the report mentions. 

Adding to the reasons of low hiring, the report also said that the drop in hiring levels has also been because talent crunch has eased and attrition levels are trending lower. It adds that the top four companies, as mentioned above, reported a record 240,000 net headcount growth in FY22.

Based on the current trends and turmoil-ridden global cues, the headcount additions are expected to be lower than FY22 for the ongoing fiscal year, the report said. Even the hiring for the third quarter is being seen as muted. 

While the IT giants largely predicted stable attrition numbers, the on-going and expected dip in talent is expected to extend across Indian IT-BPM sector, as per the report. However, the shift in demand environment will not necessarily mean a hiring freeze. It simply means that companies may still continue to invest in talent, but this time with more caution, as per the report.