Freshers in limbo as IT firms push their joining dates

The top four firms added only 28,836 employees in the second quarter ended September, a massive 45% drop from the 52,842 added in the previous quarter

The future of many freshly minted engineering graduates is up in the air.

Worried about how global uncertainties might hurt future demand, IT firms are pushing the freshers’ joining dates, after promising to hire them during the campus placement season. Experts fear that around 20 per cent of those offers may not materialise at all, given the recession fears across the globe.

“When companies don’t provide the date of joining or postpone it multiple times, candidates will not wait for long and try to pick up something or other. It may happen (that) companies will not provide the date of joining. So, instead of revoking, they will go silent on it. We fear around 20 per cent of offers may not mature because of the absence of a date of joining,” said an industry veteran who wished not to be named.

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Indian IT firms had done record hiring in 2021 to cater to the pandemic-fuelled digital services boom. The top four Indian IT firms – Tata Consultancy Services (TCS), Infosys, Wipro and HCL Tech – added 2,40,000 fresh engineering graduates in the last financial year. High attrition also prompted mid-tier companies to follow a similar strategy.

Things are changing now.

The top four firms added only 28,836 employees in the second quarter ended September, a massive 45 per cent drop from the 52,842 added in the previous quarter.

Their management teams are also being cautious about future hiring plans.

For instance, market leader TCS added 35,000 freshers in the first half of FY23, as promised. However, it said it would hire new engineering graduates as per demand.

“FY22 was a boom year. As global enterprises went digital, demand was very high. Therefore, the offers to freshers were very high in numbers amid rising attrition,” Aditya Narayan Mishra, the chief executive officer of HR consultancy firm CIEL HR, told DH. “For next year, the number of offers may be 75 per cent - 80 per cent of last year.”

Mishra said the main reason for the deferral of fresher onboarding was a 15 per cent - 20 per cent decline in the staffing needs in ongoing projects of big IT firms.

“Overall, fresher hiring by the IT industry will come down by 25 per cent compared to 2021,” he said. “In a way, restoration of normalcy will happen.”

An uncertain future

Global IT consultancy firm ISG recently said that spending on IT and business services slowed in the July-September period amid rising economic concerns.

“Companies are still invested in ongoing digital transformation but are going slower for now,” ISG said.

This trend was obvious in the second-quarter performance of many IT firms.

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TCS closed deals worth $8.1 billion, a rise of 7 per cent over last year. Infosys reported its best large deal wins in seven quarters as its total contract value from large deals stood at $2.7 billion compared to $1.7 billion in the previous quarter. HCL Tech, which reported a stellar set of numbers in Q2, closed deals worth $2.38 billion. Wipro clinched large deals worth $725 million during the quarter.

“Demand remains very strong but clients are preparing for a more challenging environment ahead,” TCS CEO Rajesh Gopinathan had said in a post-results news meet.

This anticipation of softening demand without much drop in employee attrition is putting IT firms in a spot.

“Demand is definitely not up and we are expecting a downturn (in hiring). That is the reason that companies have delayed onboarding.

“As far as the October-December quarter is concerned, it is seasonally a weak one,” said Supaul Chanda, vice-president of technology recruitment firm Experis of Manpower Group.

Hiring projections for data engineers, AI/ML experts, cloud architects, and many others engineers trained in new technology areas have come down, experts told DH.

“The pace of hiring has come down by 15 per cent - 20 per cent. They are taking a longer time to decide. That is the lead indicator, we can see,” said another person familiar with the development.

In the quarter ended September, employee attrition numbers remained at more than 20 per cent for most IT firms. However, most of them stressed that attrition numbers had peaked and were likely to come down from the next quarter onwards.

“This is an interesting scenario. On the demand side, softening is happening but on the supply side, that much softening has not happened yet,” said Mishra of CIEL HR.

As global events unfold with respect to inflation, interest rates, the Russia-Ukraine war, and winter in Europe; the demand environment will evolve.

And these unknown factors, which are miles away from engineering college campuses in India, will determine the joining dates of freshers in the coming days.