The Q1 and Q2 of the calendar year 2023 (January–June) witnessed the most significant impact on hiring in the tech sector in India. Many organisations implemented hiring freezes and even laid off employees during this period, and talent acquisition reached an all-time low. The sector has also been suffering due to decreased demand from global clients and the extra dose of caution the private equity (PE) investors and venture capitalists (VCs) have been adopting in their investment thesis. However, there seems to be brighter days ahead as a gradual improvement is expected to start early next year.
Experts to whom THE WEEK spoke are expecting a gradual revival in the sector that gives employment to one of the largest talent pools in the country. “While the situation remained challenging in the last quarter (July-September), we are beginning to detect signs of improvement. The number of layoffs has decreased, and some organisations, particularly those that were early adopters of hiring freezes, are gradually increasing their hiring numbers. However, the market is still challenging, and we are cautiously optimistic about the emerging green shoots. It hasn't fully recovered yet, but we have seen some improvement from a plummeting situation. We anticipate further improvement in the next three-four months, and a significant revival in the technology sector by the first quarter of calendar year 2024. The last quarter of this year (October to December) is likely to remain uncertain, although there could be some selective hiring, either by new companies establishing themselves or large established players resuming their hiring activities after earlier pauses,” observed Neelabh Shukla, chief business officer, Careernet.
Experts pointed out that companies are still investing in digital transformation and are looking for tech workers with in-demand skills. Despite the pick-up, the rate of recovery is still slower than anticipated. “IT services are expected to open up in the next two quarters to some extent. Global capability centres (GCC) and demand flow has been steady. Companies are strategically optimising their sales pipeline, preparing for a swift recovery when the market gains momentum. The demand for tech professionals with specific skills remains high, encompassing artificial intelligence, machine learning, data science, cybersecurity, cloud computing, digital marketing, and e-commerce,” said Krishna Vij, business head, TeamLease Digital.
Vij said in tandem with this, companies are prioritising upskilling their workforce, especially in emerging technologies to fuel their digital transformation initiatives. They offer in-house training programmes covering technical expertise, soft skills, and leadership capabilities. Online learning platforms augment this effort by providing a flexible range of courses. “Notable tech companies are investing in emerging technologies like augmented reality (AR) and virtual reality (VR) to facilitate upskilling initiatives. Moreover, lateral hiring is especially promising across various sectors. Technology, healthcare, and financial services sectors stand out, fuelled by rapid growth and a pressing need for skilled professionals. Additionally, these sectors grapple with a skills gap, intensifying the demand for lateral hires. Key sectors currently experiencing substantial technology hiring include healthcare, retail, logistics, manufacturing, BFSI, automotive, telecom, and IT software/services,” she added.
Market experts believe that there is a short-term slowdown in incremental IT spending across industries due to perceived economic risks in developed markets. This has led to a decrease in hiring in the sector. But all this may be a short-term impact. “Given the strengths that India possesses in executing digital transformation projects, it is expected that the demand will pick up again in the next few quarters once the economic risks are mitigated. That said, clients will demand higher efficiencies for their IT spending,” remarked Anurag Sinha, co-founder and managing director, Wissen Technology.
Experts also pointed out that tech firms may not be able to hire the entire talent pool they require for their AI products. This would be the case for companies wanting to hire in large numbers, especially IT services, and GCCs. “Tech firms would perhaps get the teams started by hiring fresh talent at senior levels from outside and, over a period of time, move their existing talent basis merit to AI-related work. Startups and niche product companies will definitely try to hire from the market, including from other organisations. Today some of the premier institutions have also started AI-focussed programmes apart from traditional computer science. This talent pool will possibly be able to address some of the demand challenges for these organisations,” pointed out S. Pasupathi, chief operating officer, HirePro.
It is believed that positive improvement in tech hiring will come only early next year (Jan-Mar 2024) especially for IT Services domain, the tech startups and GCCs. “The significance of India story in the long-term continues to remain strong. The talent supply and quality has been consistent, thus boosting the confidence of businesses worldwide to either outsource their technological needs to Indian IT BPM players or set up their GCCs in India. Further, the number of unicorns has been noticed all over the world and the ecosystem supporting the startups has been robust. Hence, the long-term outlook for tech hiring continues to remain bullish,” Aditya Narayan Mishra, MD and CEO of CIEL HR.
It will be a wait and watch for thousands of aspirants who are looking ahead to their dream job in the tech sector as hiring opens up gradually. As per an Employment Outlook Survey by the ManpowerGroup Q4 2023, the demand for talent in the tech sector surpasses supply where 81 per cent of organisations report difficulty finding the talent they need. The survey pointed out that despite the ongoing talent crunch, employers anticipate a Net Employment Outlook of plus 44 per cent weakened when compared to the previous quarter and this same time last year by -3 and -20 percentage points respectively.