The number of new employees in the IT sector is the lowest in two decades. Xpheno Research

According to HR firm Xpheno, Indian software services companies hired between 60,000 and 70,000 freshers in FY24, the lowest level in two decades. This comes at a time when the country’s IT sector is struggling to cope with a global slowdown in demand.

Before the pandemic, approximately 200,000 fresh workers were hired annually.

Click here to connect with us on WhatsApp

HR analysts and college placement offices that Business Standard spoke to said the number of new hires at the top five IT companies is the lowest so far this financial year. Tata Consultancy Services (TCS) is the only IT major that has said it will employ around 40,000 university graduates this year.

“The five largest IT giants have no employees, but most newcomers want to start their careers in the five largest IT companies. This is a challenge in today’s scenario,” said Shantanu Rooj, Founder and CEO, TeamLease Edtech.

Engineering universities are facing the challenge of placing students in the absence of leading IT companies in universities over the last few quarters.

“Until then, we had received confirmation from companies every year about their employment targets for next year’s batch (this would apply to the 2025 batch). In August, these companies visited campuses looking for internships. But like last year, it won’t happen this year either,” said Anjani Bhatnagar, deputy director of deployment cell, Amity University.

IT companies like TCS, Infosys, Wipro are planning their calendar for March and April and asking universities to conduct tests in July and August to hire students who will graduate next year.

However, they have shown no intention to hire so far this year.

“About 70 percent of students choose to work in IT services, and in the absence of mass recruitment, this is a problem for them,” he added.

Even as large IT companies gradually resume hiring on campuses, the number has dropped significantly, according to the university. Several companies have not yet accepted students from the 2023 cohort.

“Surplus staff from 2022 and 2023 are now being integrated into the workforce through upskilling and training programmes. As a result, the on-campus employment figures this year are much lower, with a reduction of 70 to 80 percent recorded compared to last year,” said Vadivelan Gopal, deputy director of Placement Cell at Alliance University, a private university in Bangalore.

According to Harpreet Singh Saluji, chairman of the Nascent Information Technology Employees Senate (NITES), over 10,000 freshers were waiting for admission in the last two years.

NITES, in a letter to the Minister of State for Labor and Employment, urged it to take action against Infosys, which has to admit around 2,000 candidates.

All top IT companies have said that they will honor every offer letter distributed, but the delay is worrying students.

However, experts predict that demand will pick up in FY25. Their forecast is based on the positive recruitment targets announced by major IT services companies while announcing their annual financial results for FY24.

They also say that given last year’s record low enrollment, even a summer campus drive would lead to strong year-over-year growth in entry-level recruiting.

“Some early signs, based on the positive sentiment expressed by IT industry leaders on their annual earnings calls, are encouraging and point to a potentially better year for newcomers. However, activities on the ground are yet to pick up pace and all key employers are playing cards,” said Satish Manne, partner and talent specialist at Xpheno.

“Although on a comparative scale, it is clear that activities on campus are not yet significantly higher than in the previous two cycles,” he added.

However, it seems that the low level of employment in the IT sector is compensated by an increase in employment in start-ups, as suggested by data from universities and recruitment companies.

Alliance University has recorded a 20 percent increase in the number of employees in start-ups this cycle.

A similar trend was seen at another private university in Delhi, where the number of startups coming to the college for internships saw a significant increase of 40% year-on-year in FY24, with an average package of Rs 6-12 lakh per annum.

“In scenarios where large IT services companies have not fully returned to campuses, startups have significantly increased their workforce. When it comes to startup hiring, more than 50 percent of startups are looking for young employees for various positions,” said Sachin Alug, CEO, NLB Services, a talent solutions company.

According to Teamlease data, the startup landscape has seen an almost 37 percent increase in the number of startups compared to 2023, which has translated into a 14-15 percent increase in the overall employment they provide on an annual basis.

So far, startups have hired a total of around 6.3 lakh freshers. However, analysts also say that it is difficult for start-ups and other sectors to recruit newcomers on such a massive scale as IT companies do.

“Every 10,000 entry-level talents hired incur an annual salary cost of Rs 400-450 crore, which is a huge undertaking in the current market conditions. Add to that other overhead costs and the time it takes to prepare talent revenue. This explains why campus hiring is not for the faint of heart,” Manne added.

Heading south

Over 10,000 students with offer letters waiting to be accepted

According to NITES, Infosys will hire 2,000 employees

85% of active openings are in the CTC range of Rs 3 to 6 lakh. 10% is below Rs 3 lakh and 5% is above Rs 6 lakh

Students prefer the IT services industry despite low employment rates

Universities have difficulty admitting students without the involvement of large IT companies