The not-so-encouraging business scenario in the US has started showing its effects on Indian IT services companies. The hiring data of India’s leading IT giants, Tata Consultancy Services (TCS), Infosys, Wipro, and HCLTech, hints concerning future trends for job seekers in India. The aforementioned tech giants collectively added just 1,940 employees to their workforce in the third quarter of FY23, down concerning 93% from the previous quarter.
The data indicates a declining trend in headcount addition caused by a cautionary demand environment and challenging market conditions in North America and Europe. In FY21, IT firms reported a net reduction in headcount due to the Covid-19 pandemic, but the demand for digital transformation caused a dramatic increase in hiring between Q2 of FY21 and Q4 of FY22.
The table has turned since then!
According to their recent reports, TCS and Wipro reported a decline in headcount by 2,197 and 435 employees, respectively, in the latest quarter. This marked the first instance in 10 quarters where the headcount of both companies decreased compared to the previous quarter. In contrast, Infosys had a net addition of 1,627 employees, whereas HCLTech hired the highest number of employees, which was 2,945, among the four companies. However, TCS, Infosys, and Wipro reported declining net headcounts every quarter of FY23. The companies have attributed the drop to investments made in previous quarters to develop talent to make them more productive.
The drop in net headcount addition is due to the talent investments made by these companies in the previous quarters to upskill their existing employees. The decline in headcount addition does not indicate any moderation in growth for these companies. On fresher hiring, HCLTech has, so far, hired more than 22,000 freshers in FY23 and is likely to close the year with 30,000 freshers. Wipro has hired about 3,000 freshers in Q3 and is expected to add around 5,000 in Q4, ending March 31, 2023. On the other hand, Infosys hired about 6,000 freshers in Q3, and TCS hired about 7,000.
The slowdown in hiring is often viewed as an indicator of easing demand, but top executives of IT firms deny this. They stated that they are now working to increase their reliance on existing talent and make them even more productive. The chief human resources officer of TCS, Milind Lakkad, said that the company invested in talent development and fresh talent to make them more productive, which led to a negative headcount.
Infosys’ CEO, Salil Parekh, clarifies that the company wants to ensure that all its hired talent is trained and ready to be deployed. Parekh mentioned that quarterly annualized attrition was trending downwards and was at its lowest in seven quarters in Q3 of FY23.
The slowdown in hiring by the top tech Indian companies has also raised concerns towards rising demand for digital transformation, as many fear that the IT industry may face difficulty meeting deadlines. Many companies struggle to find the right talent, with some resorting to poaching from competitors. The industry is under tremendous pressure to deliver high-quality services and solutions to clients, and the lack of available talent could impede its growth.
The IT industry is known for its cyclical nature, and the current slowdown in hiring is part of that cycle. However, as the demand for digital transformation continues to grow, the industry will likely see an increase in hiring. First, however, companies need to adapt to the changing market conditions and develop their existing talent to meet the demand for their services.
The decline in net headcount addition by India’s four top IT companies in Q3 FY23 is not indicative of a reduction in demand in the IT sector but reflects a focus on increasing productivity and investing in talent. The companies have been investing in fresh talent and talent development to increase productivity and manage attrition and campus hiring to keep a sustainable hiring strategy. This long-term approach will benefit the IT sector in India in the long run, as the focus on talent development and investment in young talent will continue to yield results in the future.
Indian tech companies are slowing down their hiring process and have added a comparatively lesser number of employees to their workforce in the last few quarters. So the message for all job seekers and professionals is loud & clear – it’s time to sharpen your skill set!
Companies expect optimal performance from their existing workforce, which will result in intense competition among employees. Moreover, the low addition of headcount and strategies employed by the Indian tech companies will also result in fewer opportunities and demand for fresh talent. As a result, the environment will be highly competitive in the coming months, and it’s high time for employees and job seekers to pull up their socks.
