Why IT sector will hire cautiously this year

The net addition of employees has dropped compared to the previous quarter

Cognizant plans to hire more than 23,000 STEM graduates and post-graduates from technical institutions in India | Reuters Representational image | Reuters

The Indian IT sector is expected to adopt a cautious approach towards hiring this year which will prevail over the next couple of quarters. IT companies are placing greater emphasis on cost reduction and maximising employee efficiency and this has led to a significant decline in the headcount growth of major IT services firms in India compared to the previous year. The net addition of employees has dropped compared to the previous quarter. Given the subdued results in Q1 of FY 2023-24 and the prevailing environment will be the key reasons for this dip in hiring.

‘The current scenario necessitates a prudent approach to recruitment, emphasising quality over quantity. Organisations are likely to prioritise hiring for critical positions and specialised skill sets that align with their growth strategies and the evolving needs of their clients. The IT sector's continued focus on transformation will require a skilled workforce proficient in emerging technologies such as generative AI, machine learning, cloud computing, cybersecurity, and data analytics, among others. Despite muted sentiments, demand for these niche skills will continue to rise 10-12 per cent Q-o-Q in this financial year,” Sachin Alug, CEO of NLB Services told THE WEEK.

He further adds that the overall, hiring outlook in the IT sector for Q2 FY24 is expected to be cautious yet strategic. “While hiring volumes may remain relatively muted, organisations will focus on optimising existing talent, strategically acquiring specialised skill sets, and embracing emerging technologies,” said Alug.

The global uncertainties may further dampen the hiring sentiments in the IT sector in the country as majority of clients in the west have expressed a cautious approach towards embarking on new projects and spending. “We have observed that hiring of IT professionals in sectors such as manufacturing, FMCG, Auto, and BFSI has gone up. They have been looking to hire architects, business analysts, engineers and analysts for data analytics, ERP and cloud infrastructure. This hiring hasn't been easy because of the mismatches between the salary levels on offer vis-à-vis the skills being sought. Despite this growth in other sectors, we do not expect recruitment to pick up in the IT industry until the first quarter of 2024,” said Aditya Narayan Mishra, MD and CEO of CIEL HR.

There is no doubt that the globe has shrunk into a digital village with technology and technology powered access to customer as the twin drivers of revenue augmentation leading to cost optimisation and efficiency enhancement. “The outlook for IT sector is in good health and direction while the global macroeconomic uncertainties may dampen the pace of growth or reduce scale of earnings slightly. India being the backyard of technology growth can look forward to another growing year for its IT sector,” said Subramanyam S. CEO of Ascent HR.

Market experts point out that in this digital age, the importance of upskilling and reskilling has assumed utmost significance and IT professionals must continuously update their skills to stay relevant and competitive. “Employers can play a pivotal role in this journey by investing in training and development programmes for their workforce. This not only ensures that they have access to a pool of skilled talent but also boosts employee engagement, productivity and retention. While the future looks promising, challenges lie ahead, including an ever-evolving cyber security landscape, data privacy concerns and the need to strike the right balance between automation and human touch. However, with the right approach, these challenges can be transformed into opportunities for growth and innovation,” said Girish Rowjee, co-founder and CEO, greytHR. 

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