This is 56% more than what these three companies added in the preceding two fiscal years cumulatively and only slightly lower than in the preceding three financial years cumulatively. ET’s analysis showed that the top three have contributed almost two-thirds to the total projected hiring for the IT industry in FY22.
The data underscores strong revenue growth on the back of robust demand leading to workforce expansion. At the same time, it has also fuelled alarming attrition rates.
In fact, net hiring by TCS alone – at 103,000 for FY22 — has trumped the cumulative net recruitment by the top three in any of the previous years. “They (new hires) reflect growth numbers and companies want to leverage on the growing demand. It has to be seen in line with the deal wins and revenue growth shown by the companies over the last couple of years,” said Gaurav Vasu, founder and chief executive of UnearthInsight.
The trend of massive hiring by the IT industry is likely to continue in the current fiscal year as well due to the robust demand outlook shared by the top companies.
TCS and Infosys have guided for 45,000 and 50,000 campus hires, respectively, for financial year 2023 (FY23).
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Last year, too, companies had forecast similar numbers but had significantly overreached their targets. Hiring from campuses was close to 100,000 and 85,000 for TCS and Infosys, respectively, in the just concluded financial year.
ETtechHCL Tech, which hired 23,000 freshers in FY22, has stuck to its previous guidance of increasing the number by 50% for the ongoing financial year.
Higher revenue
According to market intelligence firm UnearthInsight, the Indian IT industry overall is likely to add 280,000-300,000 net employees in FY22.
TCS has seen its highest-ever incremental revenue in a year in FY22, while Infosys grew the fastest in 11 years, led by digital demand, as clients front-loaded technology spends to chase new revenue streams and optimize costs.
The Indian IT services industry has grown twice as fast compared to pre-pandemic levels to touch $227 billion in revenue in FY22.
TCS, Infosys and HCL Tech have all clocked double-digit revenue growth rates in FY22, spurred by robust demand and record deal wins.
To be sure, the top three added 207,248 people in the previous three fiscal years – 2021, 2020 and 2019 – cumulatively, and 126,872 employees in the previous two fiscal years – 2021, 2020.
Of this, the three companies added 75,987 people in FY21, 50,885 in FY20 and 80,376 in FY19.
The strong demand is in turn leading to higher salary costs, weighing on operating margins. These companies are aggressively onboarding freshers, doubling down on campus hires as experienced hands demand steep wage hikes. Separately, strong demand for digital and new-age technologies is forcing these companies to take the fresher route, analysts said.
The digitisation programmes in large corporations and demand for new technologies such as Internet of Things, cybersecurity, blockchain, automation, data and analytics is also fuelling the need for freshers, said Aditya Narayan Mishra, director and chief executive of staffing services provider CIEL HR Services. “It makes sense to deploy a fresher in emerging technologies than an experienced candidate,” Mishra said.
IT industry body Nasscom forecast earlier this year that 450,000 new jobs would be created in FY22. It said the IT sector’s total workforce would touch 5 million by the end of FY22. Last year (FY21), the industry added a net 138,000 new employees.
Downside
The downside to increased demand is higher attrition rates.
Though net hiring numbers do not reflect the backfilling of vacancies and only an increase in headcount, attrition rates have hit record levels for all companies.
For TCS and Infosys, the metric stood at 17.4% and 27.7%, respectively, in the quarter ended March 31. HCL Tech’s attrition came in at 21.9% for the same period.
Companies, however, expect fresher hiring over the past two years to help arrest some of their attrition woes as these associates become experienced resources.
“Fresher hiring and productive use of freshers is a long-cycle activity. But you have seen the industry step up hiring over the last four quarters… as that supply hits productive use, it will ease up a lot of what was going on over the last few quarters,” TCS chief executive Rajesh Gopinathan said during an analysts’ call. “So, that’s why…as we look forward two quarters ahead, we think that attrition will flat line and then start tapering.
Gopinathan added that the expectation is that the bulk of this industry-wide hiring over the last calendar year will start playing a role going forward.
Infosys also sees attrition slowing down in the coming quarters.
“…Because we’ve seen a decline of five points (in attrition) in this Q4. We believe that things will start to look better in the coming quarters,” Infosys chief executive Salil Parekh told ET in a recent interview.
After increasing compensation packages three times in the previous fiscal year, the company has started rolling out annual wage hikes with effect from April and is also working on “something actively” to stem the steep rise in attrition rates, he added.
