With fears of a looming recession in the United States and Europe, information technology companies have slowed hiring, even delaying the onboarding of those they agreed to hire six months ago. .
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“We estimate that newer hires for FY24 will drop 20% as companies focus on getting delayed hires to start working on customer projects,” said Kamal Karanth, co-founder of Xpheno, specializing in technology hiring. “While some waiting to arrive may accept offers from midsize companies, smaller companies cannot meet the massive hiring targets of large IT services companies.”
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Although the overall market for software developers remains tight, economic indicators in the United States and Europe, the main markets for Indian technology companies, are sending warning signals, prompting Indian contractors to temper their expansion plans. hiring, especially for beginners.
Additionally, the growing number of employees waiting to be deployed on projects and pressures on corporate profitability are causing fewer candidates to join the junior ranks.
In FY23, Infosys Ltd is expected to hire 50,000 people on college campuses; Wipro is likely to hire 30,000 people; Tata Consultancy Services Ltd will absorb 40,000 students; Tech Mahindra Ltd will hire 15,000 and HCL Technologies Ltd is expected to hire 35,000, according to data gathered from news reports. However, many of them have received offer letters but are still awaiting their joining date after more than six months, amid slowing economic activity in the United States and Europe as central banks declare war on inflation with aggressive increases in interest rates.
The offers came as companies were optimistic about business prospects before Russia’s invasion of Ukraine fanned the flames of global inflation which was already hit by chain bottlenecks. supply due to the pandemic.
After the first months of the pandemic, IT companies in India rushed to meet customer needs to digitize their processes to reach consumers and remote work for their employees amid shutdowns across the world, creating a huge demand for software developers with such skills. and soaring wages.
However, after a year of high wages and massive employee turnover, the IT services industry is suddenly facing a slowdown in transaction activity as their customers tighten spending amid growing economic uncertainty.
With hiring freezes at product and technology companies, those looking to move away from IT departments will have few options, said Saran Balasundaram, founder of tech staffing firm HanDigital.
“In FY22, approximately 470,000 employees were onboarded into the IT and IT-based services industry. In FY23, we estimate between 350,000 and 370,000, but in FY24, if the recession continues, the numbers will drop. But at best it will be similar to FY23,” Balasundaram said.
Tech companies are desperate to increase profitability by cutting annual raises and variable payments and slowing replacement hiring. Instead, companies are reskilling their employees as labor utilization is expected to decline over the next two quarters.
On October 3, IANS reported that Wipro, Infosys and Tech Mahindra were canceling offer letters. The nascent Senate of Information Technology Employees (NITES), which reviews employee grievances in the tech sector, said some companies revoke the letters while few failed to send the offer letter to the employees. candidates.
“We have learned that Wipro has revoked offer letters, and Tech Mahindra has yet to send offer letters to some candidates, who were told they were selected,” said Harpreet Singh Saluja, President of NITES. In September, NITES asked the Department of Manpower and Employment to review the onboarding delay at Wipro in absorbing 2,000 campus graduates.
However, tech companies say they are onboarding new hires in batches. Wipro said it is onboarding recruits gradually. “Wipro can confirm that it will honor all offer letters that have been made to deserving candidates on an incremental basis,” the company said in response to questions from Mint.
TCS also said it is staggering its on-campus hires. Although Tech Mahindra did not respond to Mint’s questions, Infosys previously said it had “integrated a record number of hires” in recent quarters. The tech company argued that recruiting is customer-driven.
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