The mass hiring of freshers by the Indian IT industry will see a significant slowdown as macro factors hamper growth momentum for the sector in the near term. However, what would be of even greater concern to such entry-level aspirants is that companies are looking at leveraging generative artificial intelligence (AI), leading to several roles becoming permanently redundant.

Total hiring — which includes both freshers and already experienced software developers — had already declined from the net addition high of 3,80,000 seen in FY22 to an estimated 2,80,000 in the recently concluded FY23. There are no fully reliable estimates on how many of these are freshers. Given the high attrition, till recently exceeding 20 per cent in the industry, gross additions in FY22 would have been around 6 lakh.

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However, freshers are likely to be more impacted as IT firms have turned cautious and conservative in their hiring plans on the back of a global slowdown impact. Infosys and TCS, which recently posted their Q4 FY23 results, have seen steep drops in net hiring, of which freshers form a significant part.

Q4 performance

Infosys’ total headcount increased by a mere 29,219 last fiscal, down 46 per cent compared with 54,396 in FY22. In Q4, the hiring was down by 3,611. The company also did not give new hiring target for FY24. Similarly, TCS’ net hiring in FY23 was 22,600 as against 1.03 lakh in FY22. The company has said it may add 40,000 people to its staff in FY24.

“We have a very rich bench now and a lot of them are getting skilled or getting trained. So we have quite a leeway for the next few quarters in terms of the availability of freshers; and of course, with the agile model of doing both college and off-campus recruitment, we can always turn that up. So we have no specific number for FY24,” said Nilanjan Roy, CFO.

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Declining volumes

Human resource analysts say the hiring volumes seen two years ago won’t return anytime soon. Vijay Sivaram, CEO of Quess IT Staffing, said, “Fresher hiring this year will be subdued in comparison with the last two years. It is unlikely that the hiring levels will rise back to the pandemic levels at least before a year or two.” However, the current levels are still a 5-10 per cent uptick on the pre-pandemic hiring volumes, he added.

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“Fresher hiring has dipped from 6 lakh in FY22 to 2.5 lakh in FY23, and possibly the volume for FY24 will be 1.5 lakh, although can be increased later. The companies are being conservative as their visibility of the order pipeline is clear given the lack of robust demand. Additionally, they are also looking at higher utilisation of the available workforce,” said Kamal Karanth, co-founder, Xpheno. To be sure, the attrition rates are still at 20 per cent levels which indicates that companies could consider hiring freshers, thus creating opportunity, he added.

AI boom

While the lack of demand bought on by macroeconomic factors is one of the significant reasons for the hiring slowdown, the generative AI boom post-ChatGPT could also pose a threat to freshers’ job roles.

“The generative AI tech could eventually change some job roles, but for now there aren’t enough use cases to determine what can change. It is a distinct possibility that various repetitive task roles — testing for example — can be replaced by incorporating generative AI tech tools. If not today, in the near term, the newer technologies will affect freshers,” said Karanth.

On the brighter side, this could mean that freshers’ will do more creative and innovative work. “As some repetitive functions will be eliminated, freshers would be tasked to think more and do more innovative work, thus providing them with more meaningful and interesting opportunities,” said Aditya Mishra, CEO of CIEL HR Services.

For now though, for freshers looking at opportunities in the IT services sector, it maybe a long wait.