Top software firms cut hiring by half in 2012

The global slowdown in 2012 troubled the top Indian software vendors last year with employee hiring declining by almost half in the last one year when compared to the previous year.

In the four quarters ending December, the top four companies totally hired 55,716 employees against 1,08,117 in the corresponding period of previous year.

Indian software majors are not growing at the same rate as before. Their revenue growth has declined by 35-40 per cent over the last two years due to the economic slowdown in the US and Europe, said E. Balaji, CEO, Randstad India, a recruitment firm.

LINEAR BIZ MODEL

Since the information technology services companies still have a linear business model, any impact on revenue growth will affect employee addition too. This is why there is a decline in the employee addition in the last year.

“We have seen that IT majors had to defer joining dates and delay recruitment by as much as six months. They also undertook strict screening measures to evaluate candidates as they were recruiting for specific functions in the organisation. These reasons accounted for the fall in numbers last year but with the market gearing up and as visibility gradually improves, expect IT hiring to be back on track towards the latter half of 2013,” he said.

Last year companies faced a softer demand environment last year, and adjusted their hiring to reflect it, said Siddharth A. Pai, Partner & President, Asia Pacific Region, Information Services Group, a technology insights, market intelligence and advisory services company.

According to Jimit Arora, Vice-President research, Everest Group, the difference in jump in employee hiring in 2009-2010 and 2011-2012 was a function of the economic recovery.

DISCRETIONARY SPENDING

In 2010, the market condition was different. The economy was then recovering, the discretionary spending was making a comeback; there was pent-up demand leading to above average growth and hiring was accelerated to make up for cutbacks in 2009 and low bench strength.

The demand situation in 2010 was high and that required aggressive hiring by the Indian majors. In 2012, the demand was more “normal” and hence some of the incremental effects did not apply, he said.

Source: Business Line

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