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Business News/ Companies / News/  Job openings in Indian IT sector at 17-month low in September

Job openings in Indian IT sector at 17-month low in September

With the drop in volume in September, the FY average has slipped below 280,000 active jobs per month, which is also the longest slide in active jobs since March 2020

Overall job numbers stood at 210,000 as against 260,000 in August 2022.. MintPremium
Overall job numbers stood at 210,000 as against 260,000 in August 2022.. Mint

Even as high attrition rates continue to hurt the information technology services sector, firms seem to have begun cutting their hiring plans. According to a report by specialist staffing firm, Xpheno, the IT services sector saw only 70,000 active jobs as of September, the lowest in 17 months. This is also the sharpest year-on-year drop in active job volumes, of 36%, according to the report.

September was also the worst month in terms of overall active job openings across sectors, the report said. Overall job numbers stood at 210,000 as against 260,000 in August 2022. With the drop in volume in September, the current FY average has slipped below 280,000 active jobs per month, which, according to Xpheno, is also the longest slide in active jobs since March 2020.

According to Anil Ethanur, co-founder, Xpheno, September’s drop is a result of a gradual decline led by rising inflation concerns in local and key client markets. “The sector also over-hired during the buoyancy since last year. The current dynamics of hiring action are clear indicators of a correction in a previously overheated job market," he added.

On a month-on-month basis too, the sector collectively registered a 27% drop in volume.

“IT services and software service sectors registered drops by 13% and 42%, respectively. A drop of 35% was recorded by the internet-enabled services and startup sector that closed with 13,000 openings as against 20,000 in August 2022," the report said.

To be sure, analysts state that a slower hiring pace in IT services has been expected — as sectors such as hospitality, which suffered majorly through the pandemic, have seen the clearest return to favor.

Akshara Bassi, research analyst for global cloud and servers markets at Counterpoint India, concurred with Ethanur, adding that a key reason for the slowdown could be the distribution of IT order books.

“Most of the IT orders came through the pandemic years. With the slowdown of order books and reducing attrition levels, the hiring demand has definitely seen a slowdown in the IT sector, which is in line with global cues. Particularly in the technology and IT sectors, employers have slowed down hiring as project demand reduced from the previous years," she said.

Bassi, however, added that attrition levels are mostly set to hit the bottom rung this year. Mint reported on October 12 that IT attrition is set to remain at a high of 20% for the near term. “Employers and employees are both likely to remain hawkish on the job front, so both attrition and net job additions should stabilize going forward," said Bassi.

At Infosys’ quarterly earnings conference on October 13, Salil Parekh, chief executive of the firm, said that the drop in the net hiring count is not a major concern, thanks to “a robust large deals pipeline". He further added that the September quarter is “historically a slow one for net job additions". Infosys, incidentally, reported the smallest amount of decline in net job additions among the big three of Indian tech services in the quarter ended September 2022.

Quarterly earnings figures of IT service majors have reflected the downturn in the net addition of new employees too. For instance, Tata Consultancy Services (TCS), India’s largest IT service firm by revenue, saw its net headcount addition fall to 9,840 in the September quarter — a 50% year-on-year drop in new job additions. Infosys‘ quarterly net job additions fell 14% YoY this September — leading to net job additions of just 10,032 employees in this quarter. For HCL too, the quarter represented a 25% YoY drop in net job additions.

Analysts said that the hiring decline in the September quarter could be a reflection of the slowdown in key sectors for IT majors. Omkar Tanksale, equity research analyst at Axis Securities, said that cautious client approach in borrowing-heavy sectors such as banking, financial services and insurance (BFSI) — which is one of the main areas for Indian IT businesses — could lead to a slimmer order book and add cause for concern in the coming quarters.

Xpheno’s report noted that the IT sector’s contribution to overall job openings dropped to 58%, as against the 80%+ range it has maintained over the last year, which is also the lowest contribution that the tech sector has recorded over the last 2.5 years. The staffing firm maintained that banking, financial services and insurance (BFSI) sector remained stable at 8% overall contribution, registering 17,000 active openings in September as against 22,000 in August 2022. Other non-tech players contributed 42% of the overall job market.

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Published: 14 Oct 2022, 04:13 PM IST
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