Limited talent pool hurts hiring by IT services firms

Indian information technology (IT) majors TCS, Infosys, and Wipro are on a hiring spree, having added 51,000 employees in the third quarter alone. However, a limited talent pool and increasing competition from global capability centres (GCC) vying for the same set of executives are emerging as a major challenge in the hiring process.

Multinational companies use GCCs, or captive units offering IT support, back-office and support functions, and contact centres, as centres of excellence to increase productivity. GCCs have also been scaling up operations and hiring professionals at a higher pay, resulting in homegrown IT services companies facing a talent crunch.

“IT services companies are competing for the same talent with their GCC counterparts who are hiring at higher salary levels. Though IT services companies have loosened their purse strings, GCCs have a better brand pull, besides pay power,” said Kamal Karanth, co-founder, Xpheno, a staffing company.

IT services companies will face further challenges from hyper-growth sectors, such as GCCs and funded tech startups, as 500 GCCs are expected to set up shop by 2025, with an employee count of about three million from the existing 1.38 million. Tech startups, too, are expected to witness a three fold growth in employee count, said a Xpheno report.

“The advent of the startup ecosystem, which has employed 170,000, and the expansion of the GCC customer base in India, has definitely opened up more opportunities for software professionals in India. A skilled talent pool available in system integrators becomes an easy poaching ground for GCCs and startups. Overall, IT employment is poised to grow to approximately five million in the near term because of increased hiring at all levels across the IT sector,” said Sunil C, head, specialised staffing, TeamLease Digital Pvt. Ltd, a staffing firm.

“The Americas still account for 65% of GCCs in India, but we see that the EMEA (Europe, Middle East and Africa) slice has grown by 7% over the last two years. There are 350-400 EMEA GCCs operating in India, accounting for nearly 30% of the installed GCC base. The EMEA region also brings in more industry variety with GCCs from retail, transportation, construction, heavy engineering, and chemical and minerals. We continue to see more GCC setups coming from Europe to establish tech and shared services centres of excellence in India. In the journey towards a three million workforce in 2025, GCCs will put up a tighter and wider fight against the IT services sector,” the Xpheno report said.

“Another important aspect is that Indian IT talent no more caters to lower order jobs. They now cater to higher order jobs such as research and development because of the upgraded delivery continuum of GCCs in India. Apart from offering a premium, there is more focused career growth with clear visibility of projects to manage in GCCs, while IT services cannot offer a similar stable model as they are dependent on client projects. These are exciting times for IT talent in India and we are sure to find various channels to fill the demand-supply gap. In 8-10 years, software employment will definitely hit 10 million,” said Sunil.

Talent requirement in IT services and GCCs are similar with a high demand for digital skills such as user interface and user experience, data engineering, data visualization, data science, fullstack, robotic process automation, cyber security, artificial intelligence, machine learning, e-commerce, cloud, and mobile app development.