Hiring drops to two-year low in June quarter as companies turn cautious

Hiring by India Inc. sank to a two-year low in the June quarter, even slipping to the lows of early 2020 for some recruitment firms when the country was hit by the first wave of the pandemic.

Hiring firms across sectors say there are about 225,000 active jobs open in the market, about 100,000 less than a year earlier. Reduced revenue visibility, and freeze on fresh hirings after few quarters of ‘over-hiring and layoffs’ has led to a 75% quarterly drop in recruitments.

“Hiring demand in both permanent and contract staffing has gone down by 75% for us when compared on a quarterly basis. The April -June mandates are now at par with same period in 2020,” said Sunil Chemmankotil, chief executive officer at Teamlease Digital.

TeamLease, one of the largest staffing firms, says its clients are offering a bare 12% salary jump during job shifts, explaining that their budgets won’t stretch anymore.

This is a far cry from six to eight quarters ago when compensation for IT, retail, BFSI was doubled if an employee wanted to leave.

Contract recruitments have shrunk by 60-70% as companies and mandates emerging from sectors like IT have fallen from 60% to 10% currently in contract and permanent recruitments.

“We are looking at a muted April-June quarter of 2023 with active talent demand dipping to nearly match the previous lows seen in April-June of 2021,” said Prasadh M.S., head of workforce research at specialist staffing firm Xpheno. “The low demand in 2021 was driven by the cautionary slowdown during the second wave of the pandemic. The current quarter’s low action is driven by continued dip in tech spend and low to no expansion hiring by key cohorts of tech,” he added.

Xpheno’s data shows that the June quarter is expected to project 228,000 active jobs across sectors compared to 311,000 in the same period last year.

In 2021, when India saw the deadly second wave of covid, hiring mandates stood at 225,000 and in 2020, it was 160,000 when compared on a like-to-like basis.

Active jobs are mandates rolled out by companies.

For Manpower, a large recruitment company, the white collared workforce has taken a severe beating whereas there is still some “silver lining for the blue and grey collared employees”.

“There has been a 40% drop in white collared jobs and a 15% uptick in the blue and grey collared demand. The latter has been on the back of production linked incentive schemes (PLI) that has led to spurt in manufacturing and hiring in energy and EV sector,” said Alok Kumar, senior director, Manpower, a unit of Manpower Group.

Kumar highlighted that the sharp drop was evident mostly in the lower and middle management levels . For mass scale recruitment firms, white collared jobs may be 20% of their business.

Recruitment firms are scampering to look at other avenues to earn their revenues.

“The IT and engineering talent market faced headwinds and market complexities during this quarter, impacting overall performance. At Adecco, we responded strategically by diversifying our customer portfolio and targeting MSMEs instead of solely relying on large IT service firms,” said A.R. Ramesh, director, digital business solutions, professional staffing and international engagement, Adecco.