Hiring slowdown: Regulatory curbs, feeble festive season hit job growth

For India Inc., peak hiring season is in the festive season typically between September and December. Companies in the consumer, retail, logistics, e-commerce, insurance and banking sectors see a spurt in hiring as people splurge during this period. Hence, the demand for sales, marketing and feet-on-the-street employees who are hired both on temporary and permanent basis.

However, this festive season has been a dampener. “After the Q3 festive hiring season delivered a tepid 5,000 net additions against an expected 10,000-plus, the consumer spending has remained slow," said Lohit Bhatia, president of workforce management at staffing company Quess Corp, adding that the banking regulators’ actions have not helped matters as well.

Bhatia’s comment comes on the back of the Reserve Bank of India’s (RBI) push for stricter compliance with know-your-customer (KYC) norms last year. The regulator wants KYC to be more of an in-house activity, which has led to demand for fewer off-roll employees.

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Second, curbs against unsecured loans have also meant fewer off-roll workers who would act as feet-on-the-street on behalf of banks and non-banks. Therefore, banks have become more cautious in using services of third-party employees, which in turn impacts staffing companies.

The picture is no different at another staffing company, Teamlease Services. “While Q4 (January-March) in the previous year saw around 7,000 to 8,000 net hires, this year’s numbers may fall below those levels," said Kartik Narayan, CEO for staffing at TeamLease Services. “Typically, companies recruit in February-March to prepare for summer sales and the year ahead, but hiring momentum has yet to pick up significantly (this year)."

Besides the changes in the banking sector, a cautious microfinance sector, and slower volume growth in the FMCG industry are also hurting. The microfinance sector has tightened the rules on the number of borrowers allowed to take loans from multiple lenders.

And in FMCG, urban demand has remained slower than rural regions. In volume terms, India’s FMCG sector reported a 7.1% year-on-year jump for the December quarter, against the year-ago quarter’s 6.4%, with consumers opting for smaller packs during the festive season as prices of daily staples remained high, per market researcher NielsenIQ India.

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Hence, the lukewarm demand for junior and middle order workforce. “Q4 is experiencing a significant slowdown across sectors ranging from retail, FMCG, IT, manufacturing, GCCs (global capability centres) and start-ups," said Anshuman Das, chief executive officer of Careernet. “We have seen about 25-30% hiring dip in retail, FMCG, and manufacturing compared to the same time last fiscal year owing to the consumption slump in the economy."

Interestingly, GCC hiring is plateauing for some. “The big ones are not adding major headcounts and the bulk hiring GCC sector like BFSI is not showing any signs of upside, which was an anticipation post Trump’s election," noted Das. The new government in the US is expected to demand more jobs rolled out locally than establish centres in other countries.

On the other hand, recruitment firm Xpheno paints a different picture. “A sample group of 125 GCC bellwethers currently has over 40,000 active openings in the market, a notable 15% higher than previous month figures," said Kamal Karanth, co-founder, Xpheno. Active openings here would be open positions.

The IT services sector, one of the largest guzzlers of talent, is expected to perform marginally better in the current fiscal year compared to the previous one due to higher business from the Americas and growth markets such as Asia, with rise in hiring to match the growth.

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Mint wrote in January that TCS, Infosys, Wipro and Tech Mahindra increased headcount in April-December 2024, adding a cumulative 17,188 employees. This comes on the backdrop of the top five IT services companies cumulatively trimming headcount last fiscal by 57,735 people.

However, according to the head of a recruitment firm, recruitment companies that are lesser exposure to BFSI and telecom have fared better. “But we are suffering from candidate dropouts as many want to leave their employer but are testing the market. In the IT firms, the visa issues playing out in lesser offers," this person said on condition of anonymity.