Employment slowdown: IT firms have logged out of hiring for vacant posts

Indian IT services firms have reduced hiring even to replace those who have exited over the last few quarters as they increasingly scrap roles in traditional technologies in favour of newer ones.

Currently, nearly three out of four employees at large IT firms are deployed in traditional technology work. As client budgets shift to newer areas such as digital, analytics and cloud, the hiring trend has changed as well.

These companies are “not re-hiring” for posts that have been vacated voluntarily or where employees had to leave on performance ground, said Ronnie Screwvala, founder of UpGrad, an online platform focused on training professionals.

Indian IT services companies, which built an empire of nearly $154 billion on labour arbitrage and currently employ close to 3.9 million, have started taking strategic steps to “reduce headcount” as demand for digital technology-based services is on the rise. 

“While there is substantial de-growth in terms of hiring; there is a churn in the industry anyway and rehiring is not taking place. This allows them to consolidate their workforce without attracting criticism, the polite way of doing it,” said Screwvala. 

Even so, some global counterparts of Indian IT firms such as Oracle, Adobe and others have stepped up training to upgrade the skill sets of select employees, said Mayank Kumar, co-founder, UpGrad, which has tied up with University of Cambridge, IIIT Bangalore, to offer  digital courses for working professionals. “We have not seen a large push on that by Indian companies (on the contrary),” added Kumar. 

In the first half of this year, net hiring remained flat or dropped marginally in the top six companies, with industry body Nasscom saying that its target of 130,000 to 150,000 additional job generation would be tough to meet this year. “Assembly line concept worked very well for many years, but in the last few years the world has changed and nobody has the patience to start a project and wait for six months to look at the outcome,’’ said Krishna Kumar, founder and chief executive officer, Simplilearn, another digital technology training provider.

His fear is that a large chunk of the 3.9 million IT professionals may face the risk of losing jobs.    

‘’While Nasscom estimates if 40 per cent of 3.9 million employees do not retrain themselves they will lose jobs, my assumption is the number could be higher than that,’’ said Kumar of Simplilearn.  In fact, Indian engineering colleges have not seen hiring in large numbers in a long time. Last month, Nasscom Chairman Raman Roy said getting a pure fresh employee to work would no longer meet the timeframe and cost for IT services firms.