The Hindu Business Line : IT hiring slowing down

Changing times
Cos cautious as slowdown in US spells uncertainty.
Recruitment firms anticipate muted salary hikes,
Lateral hires hardest hit; employers ‘trimming tail’.

Moumita Bakshi Chatterjee

New Delhi, March 29 There has been a distinct decline in IT recruitments in India this year, mainly on account of the expected slowdown in its largest market – the United States.

According to leading recruitment firms that Business Line spoke to, IT companies in India, especially smaller ones, are treading with caution and overall recruitments are expected to see a drop of 30-60 per cent this year, compared to last year.

“There is a definite slowdown in hiring and this is reflecting in the appointment ads by IT companies. The Banking and Financial Services clients are getting conscious about their spending on development of new software and solutions, and the focus is now on maintenance of existing systems. Both Indian service providers and MNCs are going slow on recruitments — smaller ones are particularly affected,” Mr Kris Lakshmikanth, CEO & Managing Director, Head Hunters India, said.

postponing entry

In this scenario, many IT companies which had doled out lucrative campus offers last year are actually looking at postponing the entry dates of the new recruits, he added.

The recruitment firms are also anticipating muted salary hikes.

Compared to last year when the average pay-packets rose 13-14 per cent, this year the increase may only be about 7-8 per cent, they say.

“Overall, the recruitments are likely to be 30-40 per cent lower this year. The recruitment of lateral hires has been hit the hardest; but fresh recruitments and campus hirings too are seeing a slowdown,” Mr Vishal Chhiber, HR Head of Kelly Services India, pointed out.

According to TeamLease Services, a staffing company, while firms generally tend to reduce the pace of hiring around November-December (as US customers close the year), the recruitment drive gathers momentum in the first half of a year.

“But this year we have not seen that happening. The rate of recruitment has come down by about 60 per cent as opposed to last year. We had expected things to look up in March-April timeframe, but there is no clarity from our customers yet,” Mr Sampath Shetty, Vice-President, TeamLease Services, said.

utilisation rates

IT companies are also busy sprucing up the utilisation rates, and resources that were previously lying idle are being plugged into suitable roles and profiles, he added.

Agrees Mr Avinash Vashistha, Chief Executive of advisory firm Tholons.

“Utilisation of bench strength would be increased — from 70 per cent of utilisation earlier, it is likely to rise to about 85 per cent,” he said. Amongst the top companies, the utilisation rate (including trainees) in case of Infosys stood at 69.4 per cent during the quarter ended December 2007 compared to 67.5 per cent in year ago period, while in the case of Satyam it rose to 78.21 per cent compared to 68.49 per cent a year ago.

No-show also down

Interestingly, the once-rampant no-show behaviour (candidates not showing up at a new job despite accepting the offer), is also down to 10-20 per cent against 50-60 per cent levels seen earlier.

Mr Balaji E, CEO of Ma Foi Management Consultants, feels that while there has not been a slump in actual numbers of recruitments, companies are no longer offering the 50 per cent or more hikes.

“Hirers are no longer willing to buyout notice periods of new employees from the existing employer. If they find an employee too costly or that they would have to wait too long, they consider another employee who comes without such baggage,” he said.

He added that companies now tend to offer an average increase of about 25 per cent to lure in prospects.

Some firms are also ‘trimming the tail’.

“Exits related to poor performance are certainly happening. Gone are the days when companies would be more lenient and spend on training employees time and again if they didn’t measure up,” he added.

(With inputs from Shamik Paul and K. Bharat Kumar)

Related Stories:
Campus recruitment to fall by 38%
IT companies put new campus recruits on bench
IT cos in ‘pick and choose’ mood

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