IT industry slowing down

22 January 2009 One Comment

Written by Jibin mathews

CALL it the sub-prime effect or the looming presence of a recession in the US economy. Recruitment – a key indicator of Indian IT industry’s growth – is slowing down. Hiring across companies, especially the small and midsized, has entered into a lull with momentum certainly being downcast. It is estimated that hiring on an overall basis is down by 40-50% compared to last year.

HR recruiters across the spectrum say that the hiring pattern during the last three months is certainly not what it was in the last three years. Given the high dependence of the Indian IT industry on the US economy, companies are increasingly taking a cautious route towards hiring, with majority of the recruitment being largely need-based.

Amitabh Das, CEO, Vati Consulting, said that the general trend in the marketplace is showing that companies are not being very proactive in their hiring plans. The Indian IT/ITES industry is expected to employ around two million people by the end of FY08 against 1.6 million in FY07. A significant part of the hiring generally comes from the large companies such as TCS, Infosys, Wipro, IBM and Accenture, among others.

The current slowdown in hiring is expected to hit the small and mid-tier companies hard in their ability to attract quality talent. Nirupama VG, MD, Ad Astra Consultants, said, “Small and midsized companies are not hiring as many people at junior and mid-level as they did earlier.

They are, however, hiring at senior levels with quality becoming very stringent.” At the same time, companies are increasingly utilising their bench strength to shore up their active resources, unlike in the past. This, in a way, could have brought down the hiring momentum a bit.

Sources said that another trend being noticed is that many people on the bench in large companies are opting for midsized companies for the same level of salary or even taking a cut in packages, instead of sitting on the bench for six months or more. The slowdown pattern in the industry has had its impact on the salary levels. Gautam Sinha, CEO, TVA Infotech, said that compensation hikes are likely to decrease this year especially for those with generic skillsets, but it may not be the case for those with niche capabilities.

This has also impacted people who make movement across companies. According to Nirupama, the hikes in many cases in junior and mid-levels are nil while the maximum is 15% over earlier packages. The normal norm for such compensation hikes are generally in the 20-30% range with 50% in exceptional cases.

Source: Economic Times