Not much impact on IT hiring: survey

Not much impact on IT hiring: survey

Mumbai: The global economic slowdown will not have a major impact on the hiring plans of the Indian information technology (IT) companies, according to a survey recruitment website

The survey of senior human resource managers at IT companies found that almost 63% of the respondents don’t expect the economic troubles in the US and Europe to impact their hiring plans.

The survey included leading companies in the National Capital Region, Mumbai and Bangalore.

“The hiring outlook for the IT industry is holding steady and feedback from companies indicates that they are better geared to deal with the challenges ahead," said HeadHonchos chief executive Uday Sodhi. “HeadHonchos has seen good traction in terms of IT jobs for mid-management and senior candidates over the last six months and companies on our job portal are going ahead with hiring decisions."

The survey found that 29% of respondents expect to reduce hiring plans by 20% over the next six months while a small minority foresee a reduction of more than 30%.

An overwhelming majority— 91.9% of respondents—believe that the impact of the economic slowdown would be limited to the next six months. About 4.9% expect the impact to be limited to the next two years, while the remaining 3.2% expect a longer term impact of two to five years.

Interestingly, regional trends showed divergence, with only a third—33%—of IT companies surveyed in the financial capital of Mumbai not expecting any impact from the slowdown.

In the IT hub of Bangalore, home to Infosys Ltd and Wipro Ltd, the survey found that 72.7% of respondents don’t expect any impact, while in the National Capital Region this number stood at 64.7% of respondents surveyed.

Most respondents expect the impact of the slowdown on hiring of entry level employees and junior staff to be minimal.

The Indian IT industry added about 240,000 jobs in the fiscal year ended 31 March, a growth of about 10%. The companies have, so far, maintained that they haven’t seen any impact on order inflows from the slowing western economies and have indicated that hiring plans are on track.

In a recent research report, Citigroup Global Market analyst Surendra Goyal found a strong correlation, with a lag of three quarters, between revenue growth of the top four Indian IT services firms and the S&P 500’s operating earnings over the past 48 quarters.

According to the UK-based Ovum, an independent research and analysis firm, the global IT services market was hit hard in the second quarter (Q2, April-June period) of 2011, with the value of new contracts falling to its lowest level in more than eight years.

Ovum analyst Ed Thomas put the total contract value of transactions announced in Q2 at just $19 billion worldwide, down 40% from a year earlier and the lowest since Q1 of 2003.

The report also found that the number of deals recorded also fell to 384—a decline of more than 20% over Q2 of 2010 and also the lowest recorded by Ovum in a single quarter since the last quarter of 2007.

The fall in spending on IT services by enterprises was most noticeable in North America. In the first six months of 2011, the region’s private sector total contract value fell to just 15.5% of the global market, against 39% for the first six months of 2010.

In 2007-08, US customers accounted for 60% of the revenue of Indian IT firms. In 2010-11, the number rose to 61.5%.