Hiring by IT companies bares no sign of slowdown

The hiring trend in the local information technology (IT) sector over the past few months has defied the slowdown threatening to play out if the macro-economic situation in the US and Europe deteriorates further.

Typically, a reduction in technology staffing in the developed markets precedes a slowdown in hiring in offshore destinations like India.

But this time, the industry is not emanating any such signal though experts expect the economic health of Europe and the US to worsen further.

Tech hiring growth in the Indian and US markets in August testifies to this. The month saw strong IT hiring at 7% in the local market compared with July. Even the technology hiring in the US and Europe remained stable during the same period.

Yogesh Aggarwal and Vivek Gedda, analysts with HSBC’s broking arm, in their note to investors on Monday, said the reason hirings were not reflecting “any signs of a material downward trend” was because the market was “grappling to model the extent of the slowdown in IT demand.”

“We believe companies are reassessing their hiring plans, and initial signs of a hiring slowdown will probably be visible in the September readings,” they wrote in their report.

Surabhi Mathur-Gandhi, vice president, Teamlease Services said even though the tech industry had yet to see the impact to projected slowdown on hiring, they have cut their outlook  for creation of new jobs during the year.

“What has happened is the robust hiring projection that had been given in the beginning of the year has been toned down. In my view, hiring will go up marginally, which is in contrast with the guidance given in the beginning of this year that it will return to 2006-007 levels,” she said.

At the start of the year, the industry was expecting hiring in the current year to climb back to 2006-2007 levels when 5 lakh new jobs were created. That outlook has now been revised downwards to over 3 lakh based on the expectation of projects being closed this year.

A TCS spokesperson said the largest tech services firm’s hiring plans were on track. “There is no revision in the numbers we had announced earlier,” he said. TCS had announced to hire 60,000 new recruits from campus.

Raja Shanmugam, chief people officer, Happiest Minds, also said that his company would be sticking to its hiring plans, notwithstanding the forecast of slowdown in the developed markets. “Our company has just launched and we are in the process of hiring. There has been no revision in our plans as being new kid on the block we are hardly impacted by the recession,” he said.

Padmaja Alaganandan, executive director, consulting, PriceWaterhouseCooper believes it was a little premature to discern a significant impact of slowdown on hiring. “Even in a situation of slowdown in the rate of new client acquisition, there is a lead time before the impact on revenue and staffing is seen. Also, a significant proportion of hiring is from campus which follows a predetermined cycle and pattern, and takes time to scale back,” she said.