MUMBAI and BENGALURU: The headcount of India’s top 10 IT companies, which collectively employ 2 million people, fell by 76,572 people last year as companies cut staff in the face of an economic slowdown.
MUMBAI and BENGALURU: The headcount of India’s top 10 IT companies, which collectively employ 2 million people, fell by 76,572 people last year as companies cut staff in the face of an economic slowdown.
Jobs are not expected to recover anytime soon, according to staffing agencies and job sites, as demand for technology services slumps and concerns grow that artificial intelligence will eat into existing jobs.
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Jobs are not expected to recover anytime soon, according to staffing agencies and job sites, as demand for technology services slumps and concerns grow that artificial intelligence will eat into existing jobs.
Hitesh Oberoi, CEO of Info Edge India Ltd., which operates Naukri.com, said IT services companies had sharply increased hiring during the two years of the pandemic, but were forced to cut jobs due to the economic slowdown that followed. said.
“There was no recovery in the third quarter. IT hiring was weak in the third quarter as well. What we are seeing over the last three quarters is a severe slowdown in IT hiring,” said Oberoi. He said this in a post-earnings interaction with analysts on February 13th. In many cases, they have let people go. ”
Mr. Oberoi’s admission to layoffs is the first comment by a head of a job site, but none of the companies have confirmed the matter. Also, staffing agencies and job portals such as Naukri, Quess Corp and TeamLease Ltd offer roles in companies to people for the first time during good economic times, and their comments and performance are a good leading indicator of the health of the industry. This is important because .
Bengaluru-based twins Infosys and Wipro accounted for a combined 46,057 jobs, or more than half of the total job cuts at the largest companies, according to a Mint analysis. Three companies, HCL Technologies Ltd, Persistent Systems and L&T Technology Services Ltd, bucked this trend and ended last year with more employees than when they started 2023.
Tata Consultancy Services, Cognizant, Infosys, Wipro, Tech Mahindra, LTI Mindtree and Mphasis did not respond to emailed queries seeking comment.
“This is the first adjustment as IT services companies let go of junior and middle management positions,” said Sunil Chemmankotil, CEO of TeamLease Digital.
“More than 60,000 people have been laid off from the top five IT companies. Clients now want technology-driven services, which means fewer human interfaces. IT companies are also encouraging employees to return to the office. “People who don’t want to go are being told to go,” Chemankotil added.
Naukri’s Oberoi appears to be worried about what will happen with recruitment in the IT sector.
“Currently, our IT growth is negative. It could be down 5% to 6% year-on-year,” Oberoi said. “Of course, the last two years have been very strong, with the IT business growing by more than 100% during that time. But in the process, I suspect that IT companies are also overhiring. Currently, demand is low, so it’s like we have redundant staff,” Oberoi said. “It’s hard for me to say what could happen in the fourth quarter.”
TeamLease and Quess Corp also shared that the outlook for the sector is bleak. “I think demand remains quite subdued,” Ashok Reddy, co-founder and managing director of Team Lease, said on a post-earnings conference call with analysts on Jan. 30. . It’s not creating new demand. ”
In a conversation with analysts on February 5, Quess Corp CEO Guruprasad Srinivasan said, “India’s IT staffing and collection business continues to be affected by global headwinds,” adding, “Current recruitment Headcount is approximately 1,200, down 16% from the previous quarter.” Year over year he was 31%. ”
The IT services industry is suffering from slowing growth as customers cut back on discretionary spending due to high interest rates and military conflicts in Ukraine and West Asia. At the same time, the rise of disruptive technologies such as generative artificial intelligence (AI) could automate much of the work currently done by engineers, posing an existential threat to the country’s $245 billion outsourcing industry. concerns are growing.
Last week, IT industry body Nascom said it expected the country’s technology industry to grow 3.8% in the year to March 2024, to $253.9 billion, the slowest full-year growth rate.
Still, the gloomy comments from staffing companies contrast with upbeat investor sentiment. Shares of TCS, Infosys, HCL and Wipro have risen 6.2%, 8%, 12.1% and 12% respectively from January 1 to February 23, making them among the 30 stocks that rose just 1.2% during this period. It is higher than the Sensex. .
To compensate for the slowdown in demand from IT services companies, staffing companies are sending job seekers to banks, retailers and manufacturing companies. TeamLease claims that 66% of its revenue comes from staffing its Global Capability Center (GCC). Still, growth at all companies has been hit by declining business in the IT services sector.
Ques Corp.’s revenue increased 8% year-over-year; INRFor the October-December period, it was $4.842 billion. TeamLease total revenue INRSales for the quarter were $2,445.36 million, an increase of 21.7% year-on-year, and Naukri’s sales were up 3.1% year-on-year. INR450 million.