IT firms to go slow on hiring this fiscal

Source:The Hindu Business Line Orignal Link


May 20, 2016:  

Not many may find luck this year in getting hired by an IT company. In 2015-16, the Indian IT industry created about 2 lakh jobs, lower than the initially estimated 2.75 lakh jobs. This fiscal hiring may be even lower.

The big four Indian IT companies added 67,000 plus employees in the last fiscal, a 10 per cent increase over the previous year. But, in their forecast for the current fiscal, all of them have indicated a slower addition to their headcount.

Slowing growth

A tough economic condition in global markets has been weighing on the performance of IT vendors of late. This has led to revenue growth slipping for IT vendors in recent quarters. For India’s largest IT player as well as employer, TCS, the revenue growth (constant currency) in 2015-16 dropped to 11.9 per cent from 17 per cent in 2014-15.

With clients cutting back discretionary spends, it has been a tough year for all Indian IT companies. The going is likely to get tougher with increasing competition from their MNC peers, who have built stronger capabilities around high end services such as consulting and newer technologies such as cloud and big data.

Double digit growth for Indian players will be increasingly hard to come by. Nasscom too has lowered its 2016-17 growth estimates for the IT industry to 10-12 per cent (in constant currency terms) after 12.3 per cent growth in 2015-16.


Many Indian IT service companies are increasingly using more automotive tools in IMS and BPO service lines resulting in better productivity and lower manpower requirement. In the March 2016 quarter, Infosys for instance released 1,710 full-time employees (FTEs) equivalent work due to automation (for the full year, it freed up 3,900 employees).

In a conference call with analysts post results for the March quarter, Pravin Rao, Chief Operating Officer, Infosys, said, “We hired about 2,500-3,000 employees every quarter at the lateral level last year, but with more and more of FTEs being released through automation, we expect to see some reduction in hiring numbers.” Wipro too claims to have freed up close to 4,300 employees in 2015-16 due to roll out of Next Gen Delivery (a delivery model using artificial intelligence platform that reduces the amount of labour).

During the March quarter results, Abidali Z Neemuchwala, COO, Wipro, had said, “We plan to release about 4,500 people on our Managed Services engagement through automation throughout this fiscal year.”

HCL Technologies, which reported the lowest net additions in headcount among the top four IT companies in 2015-16, is also a case in point here.

The company added a net of 712 employees in 2015-16, down from 13,994 employees added in 2014-15.

Reasoning this out, Prithvi Shergill, Chief Human Resources Officer, HCL Technologies, said, “Our demand planning processes help us balance supply management leading to just in time hiring which ensures we have the right number of people with the right skill, in the right role and place at the right time.” The company’s automation platform- DryICE, is also driving better productivity in projects in IMS and saving resources.

Onsite hiring

Indian IT companies are also desisting from hiring employees from India to be sent onsite on work visas. This is because, getting a work visa is getting a lot more difficult. Costs too are relatively higher. So, more and more companies are looking to hire local talent in onsite locations. TCS, for instance, has said that there will be a material reduction in its hiring in the current fiscal year. Though about 32,000 trainees may join the company from campus recruitments of last year, the gross hiring may not match last year’s levels (90,000 plus) as it will do more local hiring in onsite locations. TCS’ application for work visas in April this year was down by a third compared to last year.

Changing delivery model

Pareekh Jain, Research Director, Engineering Services at HfS Research, said that other reason for drop in hiring by IT companies is also that, “they are de-layering middle management. I hear companies reducing middle management from four or five to two levels, to get closer to the customer.”

Dinesh Goel, partner at ISG, also agrees. “With greater use of platforms and change in delivery models, there is no need for as many managers now.”

(This article was published on May 20, 2016)