Advertisment

Indian IT firms back to their hiring ways

author-image
CIOL Bureau
New Update

BANGALORE, INDIA: Indian IT service firms are looking to throw open their gates yet again to prospective employees as the gloom of the global recession lifts from the $60 billion industry and demand for outsourcing services improves.

Advertisment

This is in stark contrast to the scenario a few months back when most of them had frozen salaries, promotions and, in some cases, saw their first ever declines in quarterly headcount additions.

The sector, which employs more than 2 million people, has been one of the biggest job creators in Asia's third-largest economy and used to hire people by thousands every quarter, mostly engineering graduates.

India's top two IT service firms Tata Consultancy Services and Infosys, each of which employ more than 100,000, used to shower employees with hefty pay hikes and perks not too long ago to keep their staff from being poached by bigger rivals such as IBM and Accenture.

Advertisment

"There is some confidence back in the system," V. Balakrishnan, CFO of Infosys Technologies said at the Reuters India Investment Summit in Bangalore.

"Most of the corporates are feeling much better about the economy now than they were some six to eight months back."

Infosys, India's second-largest software services exporter, last month raised its hiring target to 20,000 for the fiscal year that ends in March, up from its earlier forecast of 18,000, and Balakrishnan said it wanted to be well-oiled when growth returns.

Advertisment

Infosys, which had earlier put a hold on salary hikes and promotions for this fiscal year, said it would raise pay by an average of 8 percent this year for its employees in India.

"In the beginning of the year, the environment was so challenging that we said we won't give any wage increase for the year, and we also stopped all promotions. We had some buffer on the margins so we gave the wage increase," Infosys' Balakrishnan said.

Wipro Ltd, India's No. 3 software services firm, also said the IT industry was back to being bullish about its hiring outlook.

Advertisment

"The recovery is still taking place. It's still very slow. But I think customers have decided to move on and make things happen," Wipro's joint CEO of IT business Suresh Vaswani said.

Wipro's CFO of IT business Manish Dugar said there would be headcount growth going forward. "But I don't know if we'll have proportionate increase in headcount to the revenue."

Wipro also said it will announce a decision on wage increases during the course of this quarter.

Advertisment

Mahindra Satyam, earlier known as Satyam Computer Services that was rocked by India's biggest corporate fraud, is also looking to hire people and reinstating various employee benefits.

The company currently has a "virtual pool" of about 5,000 employees, who are not actively involved on any outsourcing project and are on reduced salaries.

On Monday, Tata Consultancy Services, India's top outsourcing company, had said the company was likely to increase wages in the next fiscal year.

Advertisment

Heady days over?

The change of sentiment in the Indian IT sector gives millions of Indians, directly or indirectly employed by the sector, a cause to cheer.

However, industry observers caution that the sector is not yet out of the woods, and it may take some time before hiring and pay scales reach pre-recession level.

Advertisment

"I don't think the hiring and pay scale in the sector will reach pre-recession levels any time soon," Tejas Doshi, head of research at Sushil Finance, said from Mumbai.

"We used to see companies hiring 15 percent to 20 percent of their employee base on an incremental basis. I don't think we'll see companies hiring 20 percent of their employee base in a year anytime soon. I think those days are gone," Doshi added.

Wipro's Dugar said any pay increases the company announces won't be in line with the heady days of the past.

Infosys' Balakrishnan said the 8 percent wage hike the company has given is as good as the 16 percent given during the good times, especially when some of its peers are still holding on to their purses.

"Wage increase is a function of how the environment is. When the environment gets better and people start hiring more the wage pressure may come back," he said.

Global Equities Research analyst Trip Chowdhry believes that it would take another one or two years for hiring to be at pre-recession levels.

"I don't think it's going to happen in 2010 at all, probably it could happen in 2011," Chowdhry said.

Mahindra Satyam's president of global operations, Atul Kunwar, believes that it will take at least two years for IT budgets of customers to go back to pre-recession levels.

tech-news