India's shrinking IT hiring here to stay, drastic change in thinking needed
Icra Ltd., the sector is expected to log a 3-5% growth in FY24, down from 9.2% in FY23. Indian IT’s key sectors of banking, financial services, insurance, retail and telecom are predicted to be particularly affected by spending cuts. All this will lead to squeezed margins.
And when margins get squeezed, the first head to experience cuts is staff cost, which accounts for around 70% of total expenses for IT majors. For the IT Inc., this is a double-edged sword. While leaner margins put payrolls under pressure, the need for specialized skills inflates costs due to premium salaries for specialized roles.
According to a Mint report, staff costs hit a six-year high for the top three IT majors, TCS, HCL Tech and Infosys, with the expense accounting for more than half the revenue for the big three. All this has led to higher than average cuts in campus hires, as well as delayed onboarding of freshers. This has major implications for other stakeholders in the IT ecosystem, not the least the education sector.
According to AICTE data, about 44% of available engineering seats went without takes in the previous academic year. This year, the figure’s reportedly risen to 54%. Lack of campus placements, delayed onboarding and stagnant starting salaries, which have not grown in a decade, have led to a steady decline in enrolments in engineering courses.
Besides, the top tier IITs and NITs, others largely produce unemployable engineering grads – a skills gap the IT industry filled on its own by hiring and training freshers at its expense. Moreover, the challenge of producing employable graduates has escalated. To address the skills gap, educational institutions must overhaul their curriculum, infrastructure, and faculty, focusing on
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