IT hiring is back with a bang

India’s top three IT companies have firmly put the Covid-19 pandemic behind them, if hiring numbers are any indication.

Tata Consultancy Services (TCS), Wipro and Infosys have reported a sharp jump in net employee hiring in the December quarter amid a strong revenue performance and the signing of record deals. Net employee hiring is considered to be a key metric to indicate the robustness of a sector.

TCS reported a 59 per cent increase with a net addition of 15,721 employees in the third quarter over the previous quarter. Q3 net employee hiring was the highest ever in a quarter, said the company’s CFO V Ramakrishnan in an analyst call.

Infosys’ net hiring jumped nearly eight times in Q3 to 9,104, while Wipro’s rose 47 per cent to 5,065.

When the pandemic was at its peak, in the June quarter, the three companies reported negative net hiring. However, all the three saw a turnaround in the September quarter.

In the December quarter, the momentum seems to have picked up even faster (see chart).

Yugal Joshi, Vice-President at research firm Everest Group, said that irrespective of the fact that the additions are coming at the back of not-so-encouraging headcount earlier, this is a good sign of demand visibility. Overall, it’s a good sign for the industry and probably an earlier-than-expected recovery, he added.

Pandemic impact

“The pandemic has made many clients explore offshore-based outsourcing and, with everyone going after cost-cutting, we see even the high-end consulting services are involving more offshore delivery. This will help Indian service providers in general and India-based delivery in particular,” said Joshi.

The pandemic has helped create newer operating models for service providers, though offshore is an important part. But there are more dimensions to it. Indian service providers should keep vetting their operating and delivery models, and not rest on the immediate large deals they are witnessing as clients want to offload their own resources to the books of Indian system integrators, he said.

Boz Hristov, Professional Services Principal Analyst, Technology Business Research, Inc, said that the net increase in headcount is no surprise given the rebound in demand for outsourcing services largely fueled by buyers warming up to seeking support for cost-effective run-the-business awards.

Additionally, the several mega outsourcing deals across these vendors include a component of 'rebadging' employees, which, too, have bolstered headcount additions.

Given the success with recent large deal wins, vendors must ensure service quality is met, and bench is staffed appropriately to execute against these deals' commitments, he said.