Retail, auto, new hiring hotspots
12% increase in contract placements in April versus the earlier three months. This indicates that these companies would rather take on people on short-term basis than for permanent roles.
Mishra noted that even global capability centres (GCCs) have slowed down their mandate closures in most profiles. GCCs are captive offshore development centres of multinational companies.
IT sector majors Tata Consultancy Services (TCS), Infosys, and Wipro posted a cumulative full-year decline of 63,759 people in their workforce in FY24.
Employee expenses, which form more than 55-60% of an IT firm’s costs, remain a concern. The trio reported an increase in their employee wage costs as a share of revenue in the March-ended quarter of 2023-24, a Mint analysis of their financial results showed.
For Wipro, which had the highest wage burden among Indian IT companies, 61.4% of the quarterly revenue went on employee benefits in the three months ended March, up from 60.5% in Q3 and 61.5% in Q2. TCS reported a marginal increase from 57.3% in Q3 to 57.4% in Q4, while Infosys allocated 53.8% to employee costs in Q4, up from 53.2% in Q3.
The slow pace of IT vacancies being filled is in turn slowing down the billing opportunity for the recruitment firms, which look at permanent hiring. In permanent recruitments, the HR firm gets a certain percentage of a candidate’s compensation after placement. In temporary staffing, there is a flat fee structure, and the same set of people gets moved from one firm to another once the stipulated period is over.
A drop in attrition rates of IT companies in Q4 of FY24 is another sign of low churn in the sector.
However, there are selective skills that need immediate attention and closure. India’s largest IT services firm, in March offered vendors Rs 40,000 per candidate over and above the fees if they manage to make senior candidates join in less than 30 days. Called the ‘Quick Joiner Incentive Plan’, vendors are however cautioned that the money will be recovered if the candidate leaves the organization in six months. The urgency to get experienced employees in programs like Flutter, Windchill, Workday, SAP.