Hiring in IT-BPO to pick up from April: Nasscom

Industry body says that the sector will be a net hirer though ‘performance-based’ separations will continue to take place.

The information technology sector, one of the services segments badly hit by the current economic downturn, has seen an almost 45 per cent dip in hiring compared with last year. Yet, the industry remains bullish and expects the situation to improve in the first quarter (April-June) of financial year 2009-10.

Software industry body Nasscom has maintained that the sector will be a net hirer, though “performance-based” separations will continue to take place. In fact, the sector is expected to hire at least 100,000 people next year. Direct employment in the sector is estimated to rise 11 per cent to 2.23 million, up from 2 million this year.

Analysts explain that 100,000 new people translate into 5 per cent growth, which is still a conservative figure. Surabhi Mathur Gandhi, general manager, permanent staffing, Teamlease Services, noted that whatever trimming was required in the IT sector had already been done and the employment had touched rock bottom.

“Now, there will only be hiring, conservative but positive,” adds Gandhi. The reason for this net hiring is that layoffs will be offset by the new recruits and so cumulatively there will be a marginal rise in hiring.

Naukri.com’s JobSpeak, which has shown the IT industry’s job index inching up by 28 per cent in January 2009, also indicates a stable job scenario. The overall job index was up 5 per cent last month. ITeS saw an increase of 18 per cent.

For the top four IT firms — Tata Consultancy Services, Infosys Technologies, Wipro Technologies and HCL Technologies — hiring is expected to go up by single digits, while the mid-tier companies, that have been hit the most, may see marginal hiring.

Alok Shende, principal analyst, Ascendia Consulting, explains that most IT vendors have deferred the joining dates of freshers and these will be like carry-over inventory, to be included this year.

“Companies are still hiring people in niche areas. Tech Mahindra, for instance is still recruiting in its security practice,” he adds.

Vinu B Kartha, partner at Advisory firm Tholons, corroborates: “There are some 2,000-odd BPO units that are still hiring. Plus, there are offers made by the IT vendors that were later delayed. Also, with offshoring reaching new heights, hiring will happen. At most, there can be a shrinkage of 15 per cent in the total employment.”

Nasscom Chairman Ganesh Natarajan said the industry was expected to recruit some 150,000 people, of which 70 per cent would be freshers and the rest laterals from other industries.

“At Zensar, we hired around 40 people from other industries last year,” said Natarajan, who is also the CEO of Zensar Technologies.

TeamLease Services’ latest report reveals that the employment outlook index for the January-March 2009 quarter stands at 34 index points. It is computed as the difference in the proportion of respondents who report an increase in hiring needs and those who report a decline in hiring needs over the next three months.

There is a decrease in the intention to hire at entry and junior levels, while there is an increase in the intention to hire at middle and senior levels. The report also shows a decrease in the intention to hire across all functions.

As far as salaries are concerned, analysts expect a negligible increase but rule out bonuses. Sandeep Chaudhary, leader of Hewitt’s Performance and Rewards Consulting Practice in India, said the salary increase in India had sharply fallen from 13.8 per cent in FY08 to about 8 per cent in FY09. In fact, the increases will be further depressed by two percentage points.

However, in some cases, where layoffs are to be avoided, salaries, specially the variable component, will be hit by anywhere between 10 and 20 per cent. At the senior levels, the variable component will dive from 60 per cent to around 25 per cent this year.