Sharpest fall in six years! Headcount at top IT companies like TCS, Infosys and others falls for four quarters; hiring takes a back seat

Headcount at IT biggies falls! The top companies in India’s information technology sector have experienced a decline in their workforce for the fourth consecutive quarter. This decline can be attributed to a reduction in recruitment at the entry level and a slow hiring process to compensate for attrition. The uncertain demand environment in their major markets has also played a role in this trend.
ET quoted data compiled by Xpheno, a specialist staffing firm, stating that the collective headcount of the top eight IT companies decreased by 17,534 in the quarter ending on December 31, compared to the previous three months.In comparison to the same period the previous year, the staff count at these companies, including Tata Consultancy Services, Infosys, Wipro, HCLTech, LTI Mindtree, L&T Technology Services, Tech Mahindra, and Cognizant’s India business, declined by 75,000, marking the sharpest fall in at least six years.
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Xpheno cofounder Kamal Karanth stated that the collective headcount of these eight companies has now dropped to a level close to that of early 2022. As of the end of December, these companies employed just under 2 million people.
The IT sector in India, which employs millions of engineers, experienced a surge in hiring around 2021 and early 2022 due to the increased demand for digitization and cloud transition globally following the Covid-19 pandemic. However, the demand has now slowed down as clients in markets like the US and Europe have become more cautious about discretionary spending in light of high interest rates, inflation, and concerns over conflicts such as the Israel-Hamas and Russia-Ukraine disputes.
This slowdown in demand has had a direct impact on hiring and headcount in the past few quarters, given the excessive hiring in 2021.
According to data collected by Xpheno, the net headcount at these companies began to decline in the January-March quarter of 2023, with a decrease of 12,455 compared to the previous three months. This number further decreased by 28,387 in the April-June quarter and by 16,624 in the following three months through September.
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However, experts suggest that the tide may soon turn. Recent financial results from various platform vendors and cloud providers have been encouraging, which could lead to an increase in demand and subsequently more hiring by IT providers. Additionally, there has been a rise in client requests for offshore-centric support for basic roles, resulting in a greater demand for entry-level talent.
Yugal Joshi, a partner at tech industry research firm Everest Group, stated that these companies were highly aggressive in their hiring practices before the slowdown in demand. However, some of them are now delaying the onboarding of graduates they had previously offered to hire during campus placements in order to protect their margins. In fact, there are graduates hired in 2022 who have not yet been onboarded by certain large IT companies.