After a time of frenzied expansion since the pandemic breakout, Indian IT services providers are hitting the pause button on hiring. Five of the country’s top ten IT services firms reported a sequential fall in sales and support workers in the third quarter, as they got to go of non-revenue generating employees and imposed an informal hiring freeze.
Wipro Ltd and Tech Mahindra Ltd, the country’s fourth and fifth largest IT services firms, reported sequential decreases in the number of sales and support workers and software engineers, respectively, in July-September.
L&T Technology Services Ltd, the smallest of L&T’s three IT enterprises, and Hyderabad-based Cyient Ltd both had fewer sales employees in the most recent quarter. Zensar Ltd, the tenth largest IT company, likewise reported a sequential staff drop. This is the first time a significant IT firm’s staff has decreased sequentially since April-June 2020.
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During the epidemic, IT services firms engaged in a hiring drive as businesses switched online. According to an investigation by sources, the ten top IT corporations added over a third of their workforce, or half a million workers, between July 2020 and September 2022.
At the end of September 30, the ten largest IT corporations did hiring of 1.74 million people. Fears of an imminent recession and decreased profitability, on the other hand, have altered the tone — and approach — of several technology services organizations.
Wipro has “rebadged” itself. Two executives familiar with the development said the company has outsourced 130 of its 250-person facilities management group to CBRE, a real estate consultant, under which these employees who managed the Bengaluru-based firm’s large campuses will be on the real estate consultant’s payroll.
Furthermore, any spending item exceeding $10,000 in any Wipro department must now be approved by the CEO’s office. Hiring at the three major IT services firms—Tata Consultancy Services Ltd, Infosys Ltd, and HCL Technologies Ltd—was also at its slowest in two years in July-September.
Staff costs account for 55-65% of overall IT business spending; as a result, some organizations are taking their time hiring skilled employees. Wipro’s operating margin was 15.1% at the end of the September quarter, down from 19.2% at the end of June 2020 by 410 basis points.
Tech Mahindra’s profit margin was 11.4% at the conclusion of the most recent quarter, compared to 10.1% at the end of June 2020. However, by the conclusion of the June quarter, its operating margin reached a high of 15.2%, causing the corporation to halt all non-essential travel and hire fewer skilled individuals. “For the time being, most projects are not seeing positions backfilled.”, told a Tech Mahindra executive.
At the conclusion of the September quarter, almost 53% of Tech Mahindra’s 163,912 employees were classified as software professionals, while 42% were classified as BPO professionals. The remaining employees are sales and support personnel.
An inquiry to a Tech Mahindra official remained unanswered. India’s financial activity has also declined in recent quarters. According to Tracxn, year-on-year (YoY) funding in startups fell by 80% in the latest quarter. This has limited these startups’ spending power. Chargebee, Byju’s, and Udaan are among the startups that have laid off a large number of employees.
Startups in India are finding it harder to acquire senior-level employees as the sector cuts costs and layoffs. According to experts, as reported by the Economic Times (ET), top professionals are withdrawing during the final phases of hiring because “it is too perilous a time to shift.”
According to the most recent Naukri JobSpeak indicator, the Indian IT sector slowed by 18% in October compared to the same month last year. Hiring has dropped by 50% at large organizations like TCS, Infosys, Wipro, and HCL.
It fell from 53,964 in the previous year to 28,836 in the fourth quarter. In September, Capgemini had 6,300 employees, compared to 11,400 in the same quarter the previous year.
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