Hiring woes continue for IT sector in Q2 FY24

New Delhi: Hiring in the IT sector has been so muted in the second quarter that net additions to the industry’s headcount which was earlier estimated at 5 lakh, is now being revised to under 2 lakh, Prasadh MS, who helms research at specialist staffing platform Xpheno, told DH.

According to data from Xpheno, the monthly average active talent demand during the period stood at 1,05,000, as against 85,000 in the April-June period, which was the lowest demand from the sector in a 3 year period.

This comes as reduced business demand propelled IT companies to cut discretionary spending and delay fresher recruitment during the quarter ended September 2023.

“For the first time in recent history, large IT services companies have shown a decline in headcount and reduced guidance values, signalling a collective exercise of caution in navigating the future,” the chief executive of Quess IT Staffing, Vijay Sivaram, underscored.

What further made it a dismal quarter is the flatlining of demand, Prasadh added. Flatlining of demand is characterised by a status quo on demand volume, slow movement of hiring funnels and low-to-no addition of expansion mandates.

During the second quarter, four out of the top-8 IT service bellwethers registered headcount degrowth to account for a 16,000-plus drop in sequential headcount. This pared the gains clocked by other players in the industry.

Moving forward, industry watchers do not foresee a notable uptick in IT hiring before the fourth quarter, at the earliest. “We believe this uncertainty will continue for a quarter or two before the next uptick begins,” Sivaram said. 

With an average 18-22 per cent growth year-on-year, Munira Loliwala of specialist staffing and solutions provider Teamlease Digital, sees global capability centres, data centres and lateral absorption in non tech industries to drive the hiring momentum in the back half of the year.

According to a report released by business solutions provider Quess Corp on Tuesday, demand for talent in functional skills suites such development, enterprise resource planning, automotive design, testing and administration  surged, accounted for  65 per cent of aggregate demand in the second quarter.

Having said that, with a 2.4 per cent growth in net workforce addition, FY24 could prove to be the slowest year for IT headcount growth in two decades.