The net hiring by top Indian IT companies surpassed the 50,000-mark in the June quarter as deal flow continued from key markets but soaring attrition, margin pressures, HR cost overload and employee-related challenges have put the industry in a bind. Sector experts, striking a note of caution, say the war for IT talent may continue till the time industry-ready manpower pool is expanded significantly.
With IT companies compelled to fill vacant positions to serve incoming demand, and non-tech firms on the prowl for tech talent to serve the needs of their digitally-savvy consumers, market watchers believe that employee-related issues will keep the IT industry poised on the razor's edge.
The net hiring by top three IT companies -- Tata Consultancy Services (TCS), Infosys, and Wipro -- crossed the 50,000 mark in the June quarter. There has been no significant moderation yet on hiring targets for the full fiscal as industry claims tech demand in the US and Europe has held up so far, despite fears of a looming global recession.
According to Sunil C, chief executive officer of TeamLease Digital, overall six million (60 lakh) new tech jobs are expected be created in the next five years. While the hiring spree has cheered tech professionals, worry lines have started to emerge among IT employers over unprecedented levels of attrition, rising manpower costs, and issues such as moonlighting (techies taking up side gigs to work on more than one job at a time).
Recent scale back in variable pay by companies such as Wipro and Infosys reflects the extent of pressure on margins. And murmurs about possible slowdown in global business momentum are bound to add to the industry's woes.
“In the short run, IT companies will continue to see the margin pressure as there is a cost overload whereas there is no increase in the deal structure. Once companies get the talent strategy right and cost optimisation projects executed, they will be able to improve margins,” according to TeamLease Digital's Sunil.
Companies may also try to get new projects and deal renewals at a better price by incorporating factors such as inflation and cost escalations, but that may prove to be easier said than done.
India’s second largest IT services company Infosys led the hiring spree with net addition of 21,171 professionals in the June quarter as attrition rose to 28.4 per cent against 27.7 per cent in the March 2022 quarter and 13.9 per cent a year ago.