83% jump in hirings: FY22 could be IT's best ever, shows data

Big 5 will collectively induct at least 160,000 employees

If the pandemic had a silver lining, it is that companies have pushed hiring efforts into overdrive. At a time when the Great Resignation is turning into the Great Reshuffle, with a large swathe of workers simply reconfiguring their careers, the country’s top five information technology (IT) companies could see 2021-22 (FY22) as the best year ever for net hirings, purely based on current trends.

According to a latest analysis by Jefferies, in FY22, Tata Consultancy Services, Infosys, HCL Technologies (HCL Tech), Wipro, and Tech Mahindra (TechM) will collectively add over 150,000-160,000 employees. That represents a huge jump of 83 per cent from 2020-21, when the Big Five jointly hired 87,000 employees.

The previous record for the highest number of employees added by the five players was in 2018-19, when they hired 90,000 new employees. 

However this record has already been shattered by the IT companies. In the first half of FY22, they hired over 110,000 employees.

The big hiring push — which has led to a surge in salaries in the IT sector — has been already acknowledged as one of the probable reasons why margins could be impacted for IT companies in the quarters to come.

Jefferies, in a separate report, points out that it expects the highest margin decline at Wipro and HCL Tech because of substantial salary hikes in the third quarter of FY22.  

Acknowledging the talent crunch because of growth in demand for IT professionals, as corporates increasingly digitise their business, TechM Chief Executive officer C P Gurnani said a recent interview to Business Standard: “There is definitely a skill war going on. The consumption has increased from all four sources: IT service providers, global technology players, start-ups, and even corporates wanting to play a role.”

On hiring trends, Jefferies-ACE Equity's analysis shows there is a formal sector employment boom reflected in the employee cost trend of the BSE 500 companies. The increase is across companies, irrespective of whether they are big players or firms with smaller lower revenue and at the bottom of the pyramid.

According to the analysis, in the quarter of September 2021, the employee costs of the BSE 500 listed companies (ranked by revenue) rose 18 per cent (compared to the September quarter of 2020). In the June quarter of 2021, the employee costs had risen 16.7 per cent over 2020.  Of course, the larger companies (ranked on a scale of 1-100) showed employee costs rise 18-19 per cent. Even the smallest companies saw their costs go up by at least 8-10 per cent.