Hiring of IT freshers by firms may be delayed amid coronavirus outbreak

Hiring of fresh engineering graduates from college campuses by information technology (IT) services companies is likely to be delayed owing to uncertainties arising out of global spread of coronavirus (Covid-19). IT firms are expected to absorb these freshers in a staggered manner. Sources in the know said the chances of dishonouring joining letters seem remote at this point in time.

Since most IT firms anticipate a demand slowdown in the coming quarters, hiring from tier-III and IV engineering colleges through walk-in interviews is going take a massive hit in 2020, said industry experts.

“Freshers, slated to join in May-June, are likely to be scheduled for onboarding in August-September. Some IT firms are likely to defer their joining, based on the developments in the US, the UK, and Continental Europe,” said Aditya Narayan Mishra, director & chief executive officer at CIEL HR Services. In a worst-case scenario, only 5 per cent of offer letters may not be honoured, he said.

Anticipating demand, the top four IT firms of India added more than 50,000 freshers last year. Hiring of fresh graduates is also part of the initiative of most IT firms to rightsize their employee pyramid, which has become mid-level heavy in recent years.

Among IT firms, market leader Tata Consultancy Services has added around 30,000 fresh graduates in the last financial year. The company’s management has said it is going to increase this number to 39,000 in the current financial year (2020-21). Similarly, Infosys has made 18,000 offers last financial year, while Wipro has said it will onboard around 20,000 fresh graduates in 2019-20.

Since 55-60 per cent of the operating cost of Indian IT services players comprises wages, hiring of college graduates keeps cost in control, apart from infusing young blood into an organisation.

“IT firms have rolled out offers to fresh graduates factoring in a bullish demand environment, which has changed after the Covid-19 crisis. But dishonouring offer letters has certain reputational risks attached to it. Also, all tier-I companies and mid-tier firms have the strength of balance sheet to absorb new hires,” said Pareekh Jain, an IT outsourcing advisor and founder of Pareekh Consulting.

Late last week, IIT-Delhi’s Director V Ramgopal Rao had appealed to all recruiters to not withdraw the job offers made to students. “Once a student is offered placement, according to the IIT-Delhi policy, the student is not allowed to sit for other placements. Students trust the companies with their offers and don’t apply to other companies,” he had tweeted.    

The IT industry is staring at a demand slowdown, with many developed countries, including the US, starting to shut down establishments for imposing social distancing to fight the spread of the contagion. As a result, IT firms have already witnessed delay in winning large deals, with reports suggesting around $3-4 billion worth deal signings deferred in March.