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IT hiring yet to go full steam

Operating margins of the top tier IT services companies have expanded in the second quarter of this fiscal year owing to the adoption of work-from-home as it has led to cost savings from less staff travel and utility expenses
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Operating margins of the top tier IT services companies have expanded in the second quarter of this fiscal year owing to the adoption of work-from-home as it has led to cost savings from less staff travel and utility expenses

Highlights

However, it is expected to improve in coming quarters

Bengaluru : The hiring of IT professionals is likely to pick up towards the lastquarter of the current financial year (January- March period) though it will take some more time to match the previous fiscal level. According to experts, IT services companies are treading cautiously despite the demand pick up in the July-September quarter as Covid-related disruptions continue to linger, delaying recovery in many sectors. This cautious approach, in turn, is leading to the hiring of a higher number of contractual staffers, they said.

"Hiring in the IT sector has definitely picked up during the second quarter of this fiscal on the back of demand revival. Currently, a major chunk of hiring is happening in the contractual staffing space with subcontractors leading the show," said Supaul Chanda, vice-president at Experis of Manpower Group.

Subcontractors such as US-headquartered Manpower Group, Swiss firm Adecco and Dutch firm Randstad are the major suppliers of these contractual staffers to the global IT industry. The headcount of the top four IT services firms- Tata Consultancy Services, Infosys, Wipro, and HCL Technologies increased by 17,079 in the second quarter (July-September) of this fiscal year after declining by around 9,000 in the first quarter (April-June). This is largely seen as a positive sign for the hiring outlook.

Despite this pickup, industry experts opined that reaching the last fiscal level would still be a far cry as the Covid pandemic continued to roil many sectors including travel & hospitality, aviation, and automotive, among others.

"Demand revival has happened but the uncertainty around the pandemic is far from over.

So, the addition of employees is mostly happening in the contractual staffing space. However, staff headcount in Q3 is likely to be better than Q2 and Q4 headcount is expected to be higher than Q3," said Pareekh Jain, an IT outsourcing advisor and founder of Pareekh Consulting.

"The hiring numbers will not match last year level as uncertainty around growth prospects of some sectors, the second wave of Covid in the US and Europe and margin protection force companies to take cautionary steps," he said. Operating margins of the top tier IT services companies have expanded in the second quarter of this fiscal year owing to the adoption of work-from-home as it has led to cost savings from less staff travel and utility expenses.

Given the uncertainty around the demand environment, companies are likely to protect their margin levels through spending less on new hiring, said Jain of Pareekh Consulting. On fresher intake in the coming year, human resources (HR) experts said that the addition of fresh graduates is likely to remain tepid.

"There are many companies which have honoured their offers given last year and have started absorbing new graduates from campuses. However, confusion also prevails in some firms as final examinations of many colleges are yet to over. Overall, addition in terms of fresh graduates is likely to remain subdued," said Supaul Chanda of Experis.

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