IT FIRMS CAUTIOUS ON HIRING AS US RECESSION LOOMS LARGE

P P Thimmaya & Thanuja B M, Bangalore
The Economic Times

Call it the subprime effect or the fears of a recession in the US. Recruitment — a key indicator of Indian information technology industry’s growth — is slowing down. Hiring across companies, especially the small and mid-sized, has entered into a lull with momentum certainly being downcast. It is estimated that overall hiring is down by 40-50 percent compared to last year.

HR recruiters across the spectrum say the hiring pattern during the last three months is certainly not what it was in the last three years.

Given the high dependence of the Indian IT industry on the US economy, companies are increasingly taking a cautious route toward hiring with majority of recruitment now being largely based on work requirement of the firms. Vati Consulting CEO Amitabh Das said the general trend in the market shows that companies are not being very proactive in their hiring plans.

The Indian IT/ITES industry is expected to employ around two million people by the end of FY08 as against 1.6 million in FY07. Significant part of the hiring generally comes from large companies such as TCS, Infosys, Wipro, IBM and Accenture among others. The current slowdown in hiring is expected to hit the small and mid-tier companies hard in their ability to attract quality talent.

Ad Astra Consultants managing director Nirupama V G said: “Small and mid-sized companies are not hiring as many people at junior and mid level as they did earlier. They are, however, hiring at senior levels with quality becoming very stringent.”

At the same time, companies are increasingly utilizing their bench strength to shore up their active resources, unlike in the past. This, in a way, could have bought down the hiring momentum a tad.

Sources said another trend being noticed is that many people on the bench in large companies are opting for mid-sized companies for the same level of salary or even taking a cut in packages, instead of sitting on the bench for six months or more.

The slowdown pattern in the industry has had its impact on the salary levels. TVA Infotech CEO Gautam Sinha said compensation hikes are likely to decrease this year especially for those with generic skill sets, but it may not be the case for those with niche capabilities.