IT INDUSTRY GOES SLOW ON HIRING, COURTESY US SLOWDOWN

New Delhi, April 21, 2008
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The Indian IT industry, which has been on a hiring spree for the last two years, appears to have been hit by the US slowdown with recruitment firms saying the software companies are trying to cut down on new additions.

Although Indian IT companies are venturing into the European market, the US still accounts over 70 per cent of their revenues. Any slowdown in this market will impact the margin and profitability of the IT companies, which are now looking to cut costs on possible areas like excessive hiring.

"There is a definite decline in the recruitments in the last two-to-three months. This is prominent in the IT services segment and not so much in the Business Process Outsourcing and product development segment," Unit Head of Kelly Services, India's IT recruitment cell at Hyderabad, Phanishree Puramshetty said.

Companies are looking at all possible means to cut costs and reducing the people on bench is just one form of it, she said.

"Earlier, IT companies used to hire anticipating projects, but this is no longer happening. IT companies now hire as and when demand emerges," strategist at research firm KRIS, Arun Kejriwal, said.

"Many IT companies are giving out no or lower bonuses this year. Recruitments are happening in the junior and mid-level management but not in the senior level," Executive Access India's Research Associate Vansh Vardhan Joshi said.

The current slowdown in hiring is likely to continue for another six months, according to Joshi.

While the recruitments have been reduced across all levels, it is the senior level management, which is suffering the most, he said.

With slowdown in the US likely to continue for some more time, the trend of decline in hiring is also expected to continue, says a recruitment firm.

Employees are also realising that it is not conducive to their growth to keep changing jobs and this is in fact leading to more stability in the industry, believes Kejriwal.