Hiring in Indian IT services industry to remain muted over next 2-3 quarters

Hiring in Indian IT services: A recent survey released on Monday indicated that companies are concentrating on maintaining their profitability against the backdrop of slower revenue growth, and that hiring in the Indian IT services sector is projected to remain muted over the next two to three quarters due to a slowdown in demand.

According to a research by credit rating agency ICRA, Indian IT services companies employed heavily between the second quarter of FY2021 and the second quarter of FY2023, as the demand for digitalization increased after the Covid-19 outbreak.

Due to the rising need for talent, the attrition rate in the business also grew at the same time, reaching 22–23%. This resulted in the top five companies in the industry hiring a record 273,000 workers in FY2022 and an additional 94,400 workers in H1 FY2023.

But as the global macroeconomic situation became more uncertain starting in Q3 FY2023, the overall demand environment for IT services worsened, the report said.

Because of this, there was a negative net addition of employees during this time, as businesses cut back on hiring and concentrated on raising overall utilisation rates.

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Hiring in Indian IT services industry to remain muted

In the most recent quarters, this has assisted businesses in maintaining their profit margins and personnel costs.

Due of the unstable macroeconomic conditions in important areas like the US and Europe, ICRA projects that the revenue growth of the Indian IT services sector will slow to 3–5% in FY2024 in USD terms from 10% in FY2023.

“The slowdown is anticipated to continue for a few more quarters, resulting in a general slowdown in industry hiring,” the research stated.

It further stated that the industry’s demand-supply mismatch has decreased as a result of the attrition rate’s recent fall.

“Indian IT service providers are still making use of the extra capacity that was installed in FY2022 and H1 FY2023. The company is now using the freshers that were hired at the time, which is preventing it from partially backfilling attrition, the article continued.