Wednesday, December 12, 2012

Why 2013 could be a bad year for IT graduates

The slowdown in India's IT sector will continue to impact campus hiring of fresh engineering graduates in 2013, according to a report by Bank of America Merrill Lynch. The $100 billion IT industry is expected to meet the lower end of 11-14 per cent growth projection in 2012-13, according to software companies association Nasscom.

Campus hiring in 2013 is likely to be lower than in 2012 just as 2012 trailed 2011 recruitments. The news should not come as a surprise because big companies such as Infosys have been deferring joining dates of new hires in the past confirming that all is not well in India's much admired IT sector.

TCS, India's biggest IT software services exporter, plans to hire 25,000 freshers in 2013-14 against 60,000 freshers in 2012-13.  That's a drop of nearly 60 per cent in a year's time.

Unfortunately, the trend is likely to be similar across big IT firms.

Cognizant’s headcount planning for 2012 was too high, according to Sriram Rajagopal, head of HR for Asia Pacific. This year, Cognizant doesn’t want all offers to hit at the same time. It is shifting towards more off-campus and lateral hiring.

Wipro's, India's third largest IT services exporter, witnessed a sharp 6.5 per cent fall in attrition in the September quarter. Lower attrition and uncertainty in the market environment have further depressed the job market for new hires, BofA-ML's report says.

"Unlike lateral hiring which can be done on an as-needed basis, campus hiring is typically carried out 12 to 18 months before the hire becomes billable.  Hence, vendors are looking to increase off campus (i.e. recruitment of freshers outside of the placement process, closer to demand) and lateral hiring," BofA-ML said in its report on the outlook for India computer services in 2013.

The investment bank says IT companies had over hired in the last few years since they had not anticipated the slowdown in discretionary spend in early 2012.

According to Surabhi Gandhi, the Senior Vice President (IT Sourcing) at TeamLease, one of India’s largest recruitment firms, companies are being cautious in lateral hiring too, perhaps because they are trying to optimize their labour forces.

A Naukri jobspeak survey confirms the slowdown in IT recruitments. Hiring in IT software was 3 per cent less in November 2012 as compared to October 2012, the survey found.

"There is some caution in the environment as the IT-software sector, which is the biggest job creator of the country, has seen consecutive five months of dips in hiring activity," the report says.