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Indian IT Companies: Indian IT staring at anaemic hiring

BENGALURU: Accenture merely added 951 people in the fourth quarter and for the 2023 fiscal, its headcount dropped by 4,900.
Accenture’s muted net addition might have a rub-off effect on Indian IT with the September quarter earnings season beginning next week. A weak demand scenario could trigger a hiring degrowth for some of the Indian IT companies until discretionary spending picks up pace.
TCS added a mere 523 employees in the June quarter, the only company among the top four with a net addition during the last quarter. The big four IT services companies combined had a reduction of nearly 18,000 people in the quarter ended June. Infosys, Wipro, and HCL had headcount declines of 6,940, 8,812 and 2,506 respectively.
Pullback in discretionary spending, cost takeout programmes and longer decision-making cycles indicate anaemic hiring across Indian IT companies is here to stay for a while.
Ramkumar Ramamoorthy, partner at growth advisory firm in Catalincs, said, “With continued weakness in discretionary spending, large cost take-out deals coming in with built-in productivity commitments, attrition coming down sharply, and employee utilization going up quite nicely, net new hiring in the IT sector is bound to be anaemic until we see some green shoots.”
Ramamoorthy said, in addition to impacting hiring of experienced professionals, this weak demand environment will materially impact hiring from Stem campuses. “We are already seeing signs of some large companies staying away from campuses, delaying onboarding as well as recalibrating their short- and medium-term hiring and training plans.”
Mrinal Rai, assistant director and principal analyst in global tech research and advisory firm ISG, said, “According to the last ISG Index, in the first half of 2023, we witnessed a significant slowdown in hiring, where annualized attrition although declining since mid-2022, has risen again in 2Q23. We are beginning to see enterprise concerns around resource availability and attrition. There is also a decline in the clients’ customer experience with providers’ ability to hire resources and provide agreed resources compared to last year.”
Phil Fersht, CEO of HfS Research, said, “This year, we have seen a decline in IT spending from 11% growth in 2022 to barely 3% this year, which is reflected in the lower revenue growth numbers from most of the IT services majors. In addition, all these firms overhired in 2021-2022 in anticipation of further growth this year, which has not materialized, and there is a big emphasis from most service providers to utilize their current workforces and make some minor adjustments to keep costs under control.”
Increased decoupling of revenue and headcount has led to productivity gains leveraging automation solutions. Hansa Iyengar, senior principal analyst in London-based Omdia said, “We need to stop judging the performance or strength of IT services companies using headcount. Gone are the days when adding headcount meant the company had a good pipeline. Increased automation – and now the increasing use of genAI tools – is making the workforce more productive by automating mundane tasks. This drives efficiencies and offers cost savings that can be passed on to the customer – and isn’t that what every organization wants– to do more with less money! This means that the reliance on junior resources is reducing and that will reflect on hiring even more in the coming years.

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