Covid-19 uncertainty to hit IT hiring in the short term

If financial year 2019-20 was bad with regard to net employee hiring by mass recruiters — Tata Consultancy Services, Infosys and Wipro — the year 2020-21 is going to be even worse with a lot of uncertainty around the Covid-19 crisis affecting recruitment plans, at least during the first half.

Collectively, net employee addition by the three companies dropped by 23 per cent to 49,888 in 2019-20 as against 64,805 in the previous year. TCS’s net addition was 24,179 (29,287); Infosys 14,248 (24,016) and Wipro 11,461 (11,502), according to company data.

The hiring slowdown was prominent in the second half due to delay in project ramp-up as some clients were holding off spending, said Abhishek Singh of research firm Everest Group. Even before the Covid-19 crisis hit, TCS and Infosys had projected lower growth for FY21, he added.

Push for automation

Indian IT companies will freeze their hiring till they get proper visibility of demand. But they will honour their employment offers made to college graduates. Total headcount in FY21 is likely to decline as compared with FY20, despite factoring in lower voluntary attrition during the year, said Everest Group’s Singh.

Sharing a similar view, DD Mishra, Senior Director Analyst, Gartner, said with a slowdown in demand, the end-user spending on IT services will go down significantly. The worst is yet to come for IT service providers. This will translate into lower revenues and the decline will depend on the exposure to impacted sectors. Many large projects are getting delayed and transformation is on hold at the moment.

As demand is disrupted, new hiring will either go on hold or stop for now till normalcy is restored. This is going to last for at least three to four quarters before recovery kicks in. The recovery is expected to start by end of 2020 or beginning of 2021 and will take some time to restore normalcy. Providers will also have to deal with cost-cutting expectations getting initiated by their clients. For this, they will push for more automation and drive process efficiencies, which will further optimise the demand for resources. These measures will trigger staff redundancy in the near future.

Giving the hiring plan, Pravin Rao, COO, Infosys, told analysts that the company would go slow on hiring this coming year in all geographies, and hire only on a need basis. There is also an opportunity to rotate subcontractors and replace them with their own people, he added.

Wipro’s CEO, Abid Neemuchwala, said that the company would have ‘trade-offs’ to make on hiring.

Positive news

There is some positive news from TCS, which has over 30,000 offers outstanding to campus recruits and will honour that. The company expects that given the impact that the Covid-19 crisis has had on the university system, their exams might get delayed to June, July or some time later. But immediately after that, TCS will start bringing them on board, CEO Rajesh Gopinathan said.

Echoing optimism, Sriram S Padmanabhan, Director, Career centre - SRM IST, said, “We expect campus recruitment to pick up by August-September, but could get delayed depending on the duration of the Covid-19 crisis. There is no indication of any drastic cut in campus numbers from companies,” he added.

At SRM, over 8,500 offers have been made for the 2020 batch by companies who said that they would honour them even as onboarding may happen in a staggered way, he said.

There will not be any major spike in headcount additions. Automation in service delivery will definitely play an even larger role in vendors’ resource management strategies post Covid-19, said Boz Hristov, Professional Services Senior Analyst, Technology Business Research, Inc.

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