IT Campus Hiring To Drop At Least 50% In CY2024

Campus hiring by the Indian IT industry is looking at a 50 per cent drop for the upcoming campus season, reflecting a significant downturn in the traditionally robust hiring trends of the sector.

With India producing approximately 15 lakh engineering graduates annually, the IT industry has typically absorbed around two lakh of these freshers through campus placements. However, the current scenario indicates a drastic departure from the norm, with indications of a 50-60 per cent reduction in overall fresher hiring for the year, said Sunil Chemmankotil, CEO at staffing solutions company TeamLease Digital.

The IT industry has had a very subdued CY2023, with financial performance across all major IT players in the country taking a major hit across H2 FY2023 and H1 FY2024 (CY2023 combined). 

What Happened?

Indian IT services firms had anticipated sustained high demand, prompting them to hire a record 2,73,000 employees in FY2022 and an additional 94,400 in H1 FY2023. However, macroeconomic challenges in key US and European markets led to a demand slowdown in IT services in H2 FY2023. Consequently, the top companies hired fewer employees in the last four quarters, leveraging the workforce added in FY2022 and H1 FY2023 to meet existing demand. The adjustment reflects the industry's response to shifting economic conditions and underscores the strategic use of existing resources to address fluctuations in demand.Source: Icra Research"This year, a couple of IT service majors decided not to do campus hiring and that means there is a huge drop. Meanwhile, others have said ‘yes’ to hiring, but still they have not started the process by now. They would have been in campus and hiring in big time (by now). But overall, the mood I observe is that the campus hiring for this campus season looks to be very poor," Chemmankotil affirmed.

IT major Infosys in Q2 FY24 post-results press conference announced that it will most likely not visit campuses in the current fiscal year as the company continues to have a significant fresher bench. The company’s CEO and MD Salil Parekh had stated that the company harbored inefficiencies within its employee pyramid with potential for optimisation, expressing confidence in the ability to enhance utilisation levels to the range of 84-85 per cent. But the CEO had also said that the company would monitor the situation on quarterly basis.

Meanwhile, Tata Consultancy Services (TCS) has maintained that it would look to onboard 40,000 freshers in current fiscal but did not rule out lateral hiring. The company during Q2 results said that it would keep an eye on the demand outlook on for discretionary spending.

Wipro, India's fourth-largest software services firm, is also adjusting its hiring strategy due to a challenging business environment. Instead of a large-scale recruitment drive, the company said it planned to prioritise fulfilling existing job offers before bringing in new hires. This shift comes amid decelerating sales in the fiscal second quarter and lower-than-expected net income. Saurabh Govil, Wipro’s Chief Human Resources Officer, during Q2 FY24 results press conference had emphasised caution in response to industry-wide changes and mentioned a reduction in overall new recruit intake for the fiscal year, despite hiring 22,000 new graduates in the previous fiscal year.

2024 Outlook

The current situation is witnessing stable domestic consumption and there's no anticipated drop in it. However, concerns arise regarding export consumption, which constitutes 70 per cent of the Indian IT industry. The recent federal announcement to maintain interest rates is being viewed positively. While US labour markets are performing well, a hold on discretionary spending, comprising 20 per cent of total IT spend, is affecting the industry.

Also, the uncertainty stemming from global events, including geopolitical tensions and potential Covid flare up, may prolong the recovery further. Sunil Chemmankotil, CEO at TeamLease Digital, suggested a cautious approach for the next two quarters, expects a status quo in IT industry activities with a focus on immediate needs by the IT companies in the country in terms of hiring.Trend in headcount for top 5 listed IT Services companies | Source: Icra Research“Two factors which will be very important to watch out would be the crash landing of US economy into recession and further slowdown in China’s economy. If these two risks do not progress further and get subdued, then we would be able to mitigate the global impact on IT hiring trends,” said Anshuman Das, CEO at Careernet.

Further, Das anticipates subdued hiring in the first and second quarters of CY24, with a prospective recovery in the latter half of the year. “This shift is expected as the US monetary policy softens, paving the way for improved economic growth,” he added.

Das sees campus hiring in IT to see an overall dip of 25 per cent in 2024.

Icra, the credit rating agency, foresees a subdued hiring environment to persist for the next two to three quarters due to a demand slowdown. The agency’s expectation is grounded in the anticipated deceleration of revenue growth in the Indian IT services industry, projected to be 3-5 per cent in overall FY2024 in USD terms, compared to the robust 10 per cent in FY2023. Icra predicts this slowdown to persist for the next couple of quarters, leading to an overall deceleration in hiring across the industry.