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Fresher hiring in India's IT sector tumbles to two-decade low: Xpheno

HR analysts and college placements offices that Business Standard spoke to said fresher hiring by the top five IT firms has been the lowest in this financial year so far

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All top IT firms said they will honour every offer letter handed out, but the delay is making students anxious.
Ashutosh Mishra New Delhi
5 min read Last Updated : Jun 16 2024 | 10:32 PM IST
India’s software services companies have hired between 60,000 and 70,000 freshers in FY24, the lowest intake in two decades, according to HR firm Xpheno. This comes at a time when the country’s IT sector is battling global slowdown in demand.

Before the pandemic, around 200,000 freshers were hired annually.

HR analysts and college placements offices that Business Standard spoke to said fresher hiring by the top five IT firms has been the lowest in this financial year so far. Tata Consultancy Services (TCS) is the only IT major that said it will recruit around 40,000 graduates from campuses this year. 

“The top five IT giants are not hiring, but most of the freshers want to start their careers with the top five IT firms. In today's scenario this is a challenge,” Shantanu Rooj, founder and CEO, TeamLease Edtech said.

Engineering colleges are facing the challenge of placing students in the absence of top IT firms from colleges in the past few quarters. 

“Every year, by this time, we would get confirmation from companies about their hiring targets for the next year's batch (this would be for the 2025 batch). By August, these companies used to hit campuses for placements. But like last year, this is not happening this year as well,” said Anjani Bhatnagar, deputy director, Placement Cell, Amity University.

IT companies like TCS, Infosys, Wipro, plan their calendar in March and April, and approach colleges to conduct trials in July and August to hire students who will be graduating next year.

But this year, they have not shown intent for hiring so far.

“Around 70 per cent students target IT services jobs, and in the absence of bulk recruitment, it is a concern for students,” he added.

Even if large IT firms are gradually resuming campus hiring, the numbers have gone down significantly, according to colleges. Several firms are yet to induct students from the 2023 batch.


“The excess hires from 2022 and 2023 are currently being integrated into the workforce following upskilling and training programmes. Consequently, the on-campus hiring figures for this year are markedly lower, with a reported reduction of 70 to 80 per cent compared to last year,” said Vadivelan Gopal, associate director, Placement Cell, Alliance University -- a private university in Bangalore.

According to Harpreet Singh Saluja, president Nascent Information Technology Employees Senate (NITES), over 10,000 freshers are waiting to get inducted over the past two years.

The NITES, in a letter to the Minister of State for Labour & Employment, urged it to take action against Infosys, which has to induct about 2,000 candidates.  

All top IT firms said they will honour every offer letter handed out, but the delay is making students anxious.  

Experts, however, predict that the demand is expected to pick up in FY25. Their projection is based on the positive hiring targets announced by big IT services firms during their FY24 annual earnings call.

They also say that given the record low volume intake last year, even a lukewarm campus action will drive a high Y-o-Y growth in entry-level hiring.

“Some early signs, based on the positivity voiced by the IT bellwethers in their Annual earning calls, are encouraging and point at a potentially better year for freshers. However, action on the ground is yet to pick up and all key employers are playing cards close to their chest,” said Satish Manne, Partner & Talent Specialist, Xpheno.

“Though, on a comparative scale, clearly campus action is not yet notably higher than the previous two cycles,” he added.

The low hiring from the IT sector, though, is seen to be compensated by an increase in hiring from startups, data from colleges and recruitment firms suggest.
Alliance University has seen a 20 per cent jump in hiring numbers from startups in the current cycle. 

Similar trend was visible in another private university in Delhi, where the number of startups coming to the colleges for placements saw a notable 40 per cent increase Y-o-Y in FY24, with average packages ranging Rs 6-12 lakh per annum.

“In scenarios where the big IT services companies are not fully back on campuses, start-ups have significantly increased their hiring numbers. Talking about start-up hiring, more than 50 per cent start-ups are targeting freshers for various roles,” said Sachin Alug, CEO, NLB Services - a talent solutions company.

According to Teamlease data, the startup landscape has experienced a nearly 37 per cent surge in the number of startups compared to 2023, resulting in a 14-15 per cent increase in the overall employment they offer on an annual basis.

Startups have collectively recruited approximately 6.3 lakh freshers to date. However, analysts also argue it is a tough task for startups and other sectors to do the heavy lifting in terms of recruiting freshers at such a massive scale that IT companies do.

“Every 10,000 entry level talent hired has Rs 400 - 450 crore annual salary cost load, and that's a huge undertaking in the current market conditions. Add to this, the other overhead costs and time to make talent revenue ready. This explains why campus hiring is not for the faint hearted,” Manne added.


Heading south
 
Over 10,000 students with offer letters waiting to be onboarded
 
Infosys to onboard 2,000, according to NITES
 
85% of the active openings fall in the Rs 3 -6 lakh CTC range. 10% are below Rs 3 lakh and 5% are above Rs 6 lakh
 
Students prefer IT services industry despite low hiring rates
 
Colleges struggle placing students without major IT firms' involvement

Topics :IT sectorIT firms hiringTata Consultancy ServicesIT Services industryIT jobs

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