Headhunters scramble as hiring falls in Q3

Headhunters are scrambling to secure hiring mandates from companies, especially technology companies, as the pandemic-fuelled recruitment frenzy for mid-level workers cools in the face of a looming economic slowdown. Executives at multiple recruitment firms said that hiring by technology and e-commerce companies in the December quarter is 50% below last year’s levels.

“Whatever recovery we had seen (after covid) has eroded. In the third quarter (October-December), hiring is typically low for IT outsourcing, as it coincides with the Christmas holidays and the furlough period in the West. Yet, we were still hoping for a better quarter than Q2, but no more,” said Aditya Narayan Mishra, chief executive of Ciel HR services, a mid-management recruitment firm. Hiring by IT outsourcing companies has dropped by 45% from the same period in 2019 and by 55% from last year, Mishra said.

The slump is the worst in IT and IT-enabled services since the covid-fuelled hiring frenzy when companies were rushing to digitize swelled demand for large technology teams and inflated salaries. However, big technology companies worldwide have seen client sign-ups drop, and the hiring momentum has slowed.

The startup sector is also experiencing a decline in recruitment. “Hiring demand in IT across the cohorts of IT services, products, and tech startups has dropped by nearly 30% compared to pre-covid levels seen in Q3 of 2019,” said Kamal Karanth, co-founder of Xpheno, which specializes in tech and startup hiring.

Startups in India have laid off roughly 17,000-20,000 since the beginning of this year as funding slowed and companies found themselves overstaffed. As a result, recruiters had a particularly tough month in October.

“On a year-on-year basis, October had a massive 58% drop in action against the hyper-hiring Q3 of 2021. While a recovery curve has been set in motion, it will be a gradual curve up and not a sharp V-shaped recovery as witnessed over the last two years,” cautioned Karanth.

On Monday, Mint reported that fear of social media backlash to widespread job cuts prompted some Indian companies to offer extended benefits to retrenched junior and mid-level employees, but CXOs do not receive a similar treatment.

With the festive season ending, consumer-focused companies have also lost their sheen. Mishra noted that while traditional retail stores are hiring to make up for two years of the pandemic, e-commerce firms have seen a 15-20% dip in hiring. Compared to the third quarter of 2019, the numbers are flat. “We are working hard to find new sectors like telecom and pharma, which are showing signs of revival,” Mishra told Mint.

According to ABC Consultants managing director Shiv Agrawal, pharmaceuticals is among the few sectors that haven’t seen hiring targets to fall below pre-covid levels. Recruitment for middle and senior cadre in the pharma sector should remain flat in the December quarter from the previous year, he said, adding that there is a 10% growth from 2019.