Hiring in Indian IT industry to be affected due to volatility in market

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It is expected that the Indian IT sector would witness a dip in hiring in the financial year 2018-19, as the sector would hire 20 to 30 per cent less people than the previous years. This may be due to the volatility in the market and the fact that the IT industry growth is no longer directly proportional to the head count of software engineers. Experts with whom THE WEEK spoke to feel that, globally too, the IT sector is experiencing a VUCA (Volatile, Uncertain, Complex and Ambiguous) environment to its fullest this year and that will affect hiring in the sector.

“Due to automation, there is pressure on margins and therefore companies want to squeeze costs. At the same time IT companies have also increased the utilisation rates from the previous 70 to 72 per cent to the new norm of 80 to 82 per cent. In other words, you are using the same manpower and getting more work from them. Companies are hiring from campuses but here again the traditional IT companies are hiring less. However, the MNCs, captive centres of MNCs, product companies, startups, e-commerce companies are hiring from campus. In all these cases, however, the companies are particular about quality and are not willing to compromise on quality,” Kris Lakshmikanth, founder and CEO of The Head Hunters India, an executive search company, told THE WEEK.

Lakshmikanth also points out that new age skills like robotics, automation, big data, analytics, social media, are very much in demand in the IT sector and there is a huge wage or salary gap being created due to the new skills. “For instance, a software engineer with three years of experience and generic skills will be earning between Rs 3.5 to 4.5 lakhs per annum. However, a software engineer equipped with new age skills and with 3 years experience, will be earning between Rs 6 to 8 lakhs per annum. The software industry till date was one where there was a certain uniformity, a certain hierarchy. All these are being broken because of the new age skills which are in demand. The supply of people for these skills is not enough to meet the demand and hence there is a premium being paid to the people with these new skills,” added Lakshmikanth.

Kedareshwaran S., Assistant Professor – IT and Analytics, at TAPMI in Manipal, Karnataka is of the view that stiff policies on H1-B visas from the Trump administration has affected the margins of Indian Tier 1 IT services companies by 200 bps (Crisil Report, May 2017). “The political uncertainty is coupled with the growth of disruptive technologies in the field of artificial intelligence, block chain and 3D printing. This disruption has led to the automation of services such as customer care and supply chain to name a few. More and more companies across diverse sectors from manufacturing to healthcare are trying to exploit the power of these new technologies by experimenting with prototypes and building pilot use cases. These technologies are creating new kinds of jobs in the domain of data science but at the same time cutting jobs by reducing the need for human capital for routine to semi-structured decision making,” said Kedareshwaran.

Kedareshwaran also observed that several B-schools in India and premium engineering institutions are developing programmes to meet the demand for analytics professionals in the IT sector. The skill sets which are of need is an integration of three disciplines – business management, computer science and statistics. Different programmes are oriented towards offering tailor-made inputs across these three disciplines.

Market experts such as Pinkesh Shah, co-founder and director at Institute of Product Leadership feel that currently, the IT industry has been adopting flexi or contract staffing because of the volatility in its line of business. This allows flexibility in shedding employees in the case of the business not growing as anticipated. “The future hiring process in the Indian IT industry could see major transformations where employees would be selected digitally based on their capabilities to showcase their skills. Digital transformation has taken place in most of the IT firms because of which the demand of job roles have changed over the years. Job roles that are focussed on advanced technologies like the Internet of Things (IoT), artificial intelligence (AI) and virtual and augmented reality (VR & AR) will be in demand in the IT industry.” remarked Shah.

Gopal Devanahalli, Chief Executive Officer at MeritTrac Services is of the view that campus hiring is better than last year, but is yet to peak, though off-campus is seeing an upswing.

“For the entry-level jobs, the selection process is very rigorous. So apart from the regular aptitude tests which are conducted as part of the recruitment process, there will also be assessments for technical and functional skills like Java and programming and similar ones. The other interesting trend we have noticed is that aptitude tests will also start assessing candidates based on not just their cognitive skills, but also skills like critical thinking and creativity. For the mid-level employee, the IT companies are looking for next-gen skills. NASSCOM has identified 9 different areas of future skills like AI, IoT, blockchain, cloud computing, big data, virtual reality, social and mobile, robotics, and 3D printing. The companies are looking for candidates with skills in these areas, and are assessing candidates based on the skill sets the industry demands and the employers require,” said Devanahalli.