Source | TE RAJA SIMHAN | http://www.thehindubusinessline.com
The hiring dynamics of the IT sector is changing dramatically and at a rapid pace, too.
Just a couple of quarters back, the IT/ITeS industry was a million strong and counting. But, now, it is thinking hard before adding employees.
Since the start of the Y2K boom it took nearly a decade for the top four mass recruiters of the IT industry — TCS, Cognizant, Infosys and Wipro — to cumulatively add nearly five lakh employees. Then, in just the next five years, they doubled their headcount to one million — a landmark achieved in the June 2016-17 quarter.
Yet, just months later, the companies are going slow on their hiring due to the shift to cloud services, higher employee utilisation, and rising automation, say analysts tracking the IT sector in email responses.
Infosys’ net employee addition was 5,719 in the first nine months of fiscal 2017 compared with 17,196 in the same quarter last year. “This is a significant reduction. We continue our relentless focus on introducing automation across our projects in the backdrop of pricing pressure in traditional services and we expect this to reflect in our future hiring,” CEO Vishal Sikka told analysts.
TCS reported slower hiring in the December quarter. Though Cognizant and Wipro bucked the trend, cumulatively, there was a drop by nearly 3,000 employees in the December 2016 quarter versus the corresponding previous period.
Boz Hristov, Professional Services Senior Analyst, Technology Business Research, a US-based research firm, says the exponential hiring followed the natural bell curve of IT outsourcing market maturity.
In the dawn of outsourcing (late 1990s to early 2000s), large enterprise clients were enticed by the cost savings these vendors offered, impacting the rate of hiring, supporting labour arbitrage equation.
With the advent of cloud and impact of as-a-service-based delivery and automation, labour arbitrage has reached an inflection point with training, re-skilling and up-skilling of existing resources becoming the norm.
According to DD Mishra, Research Director, Gartner, a research firm, traditional sourcing work, which many Indian IT companies were good at, is getting renegotiated. These negotiations are able to drive down costs by 10-20 per cent. “Cloud First” strategy is being adopted by many companies globally. Commoditisation of IT services will require fewer people and make services cheaper.