Many numbers of techies in Telangana may loose jobs for expected recession in IT industry, according to industry experts.
Thousands of techies may lose their employment in Telangana due to concerns about a worldwide recession and layoffs anticipated in India. Under the condition of anonymity, a Telangana-based business expert stated, “The number of employees who may lose jobs can be as low as 15,000 to 20,000. The layoff may be more than three months, anywhere from six to twelve.
The sector is optimistic that India’s recession won’t be as severe as the one in 2008.” According to a recent KPMG survey, 66% of CEOs in India believe that there will be a recession within a year, and 86% believe that it will have a 10% impact on corporate earnings. In India, 62% of CEOs, compared to 73% internationally, think that a recession will undermine growth. There are indications that the Great Resignation may be slowing down in light of the ongoing economic unrest, with 33% of CEOs in India having already imposed a hiring block.
In India, another 47% of CEOs are considering staff reductions in the upcoming six months, he continued. There will be firings, although the Forum of IT Professionals (FORITPraveen )’s Kumar advised against resignations. Companies will make employees resign because they are unable to fire them.
According to the law, resignation is a voluntary act while termination is difficult to justify. Companies will demand that workers resign. Wipro already carries it out. Many students, especially freshmen, are affected. “Be it the business environment, the supply chain, or concerns pertaining to talent, the size of these challenges has evolved tremendously, and what matters is how agile business leaders are in responding,” said Yezdi Nagporewalla, CEO of KPMG in India. The need for upskilling is emphasised by IT associations. The banking and insurance sectors may be impacted by the recession, according to TITA’s Sundeep Kumar Makthala. The tourism, entertainment, and travel industries all suffered during the Covid epidemic.
Upskilling is the key now. The top technology in the market now is artificial intelligence as almost every component now comes with facial and voice recognition. Another is cyber security as the digital footprint has increased and as the need for security is even more.”
Indian IT biggies reported decent set of numbers with a few exceptions. However, hiring trend, which is one of the lead indicators, is showing signs of fatigue. After a e year of record hiring in FY22, employee addition numbers are slowly inching down.
The top four firms – Tata Consultancy Services, Infosys, HCL Tech and Wipro – added only 28,836 employees in the second quarter ending in September, a massive 45 per cent drop from the 52,842 added in the previous quarter. Similar is the case of fresher hiring.
The top four Indian IT biggies added 2,40,000 fresh engineering graduates in the last financial year. It is also witnessing a downward trend. Meanwhile, silent firing has started across the board with mid and senior level people becoming the first casualties. Even onboarding of fresh graduates is being deferred.
These are not encouraging news for the $227 billion-strong Indian IT industry. But it is on an expected line. When the world is fighting is high inflation and Russia-Ukraine induced economic uncertainty, IT spending is likely to come down in the near future.
Global IT consultancy firm ISG, which tracks outsourcing contracts, recently said that spending on IT and business services slowed in the July-September period amid rising economic concerns. Interestingly, most IT companies reported robust deal pipeline despite slowdown talks. TCS closed outsourcing contracts worth $8.1 billion, a rise of seven per cent over last year.
Infosys reported its best large deal wins in seven quarters as its total contract value from large deals stood at $2.7 billion compared to $1.7 billion in the previous quarter.
Similarly, HCL Tech, which reported a stellar set of numbers in Q2, closed deals worth $2.38 billion. Such deal pipeline puts domestic IT firms in a good stead as far as revenue growth in FY23 is concerned. The concerns, however, remain for the next financial year when the slowdown impact will play out in full scale.
Meanwhile, attrition numbers are coming down, albeit on a slow pace. Most IT firms continued to see more than 20 per cent employee attrition numbers in the second quarter of FY23. However, commentaries of officials indicate that attrition numbers have peaked and would inch down in the second half of the fiscal year.
While hiring, attrition, deal pipeline and revenue growth remain on a positive trajectory, operating margins of IT firms are the real sticky points. Despite improvement in margins, companies are likely to end up this fiscal year at the lower end of their guidance.
Given the cost pressures coming from wage hikes, travel & utility expenses along with cross currency headwinds, IT companies are likely to pursue several cost optimisation measures in coming quarters. Letting go of staffers, holding back of bonuses, cut in marketing spend, increased automation and reduction in reliance on subcontractors are some of the levers that will be pressed to keep cost under control.
Hike in contract prices is another feasible move to follow. However, if demand environment turns bad, getting a price increase will be difficult in coming quarters. All in all, second quarter earnings of Indian IT firms is a mixed bag with a cautious outlook. #hydnews #hyderabadlive #KhabarLive
