IT Hiring in India: From Boom to Bust and Beyond

IT hiring in India has witnessed a roller-coaster ride in the past few years, from a boom in 2021 and early 2022, to a bust in 2023 and early 2024, and to a possible recovery in the near future. The demand and supply of IT talent in India has been affected by various factors, such as the global pandemic, the digital transformation, the economic slowdown, the geopolitical tensions, and the innovation and competition in the IT industry. Here are the details of the news and its implications for the industry and the job seekers.

The Boom Phase: 2021 and Early 2022

The IT hiring in India reached a peak in 2021 and early 2022, driven by the surge in demand for IT services and solutions from the global clients, especially in the US and Europe. The Covid-19 pandemic accelerated the digital transformation and the adoption of technologies such as cloud computing, artificial intelligence, data analytics, and cybersecurity, creating a huge opportunity for the Indian IT companies to offer their expertise and solutions. The Indian IT industry also benefited from the favorable exchange rate, the government incentives, and the availability of skilled and cost-effective talent.

According to NASSCOM, the Indian IT industry grew by 8.4% in FY 2022, reaching $226 billion in revenue, and employing over 5 million people directly. The industry also added over 2 lakh net new jobs in FY 2022, the highest in six years. The IT hiring was also robust across all levels, from freshers to experienced professionals, and across all domains, from software development to testing to support. The IT companies also increased their salaries, bonuses, and incentives, to attract and retain the best talent.

The Bust Phase: 2023 and Early 2024

The IT hiring in India witnessed a sharp decline in 2023 and early 2024, due to the uncertain and challenging demand situation in the global markets. The IT spending by the clients slowed down or postponed, due to the factors such as the high interest rates, the inflation, the economic slowdown, and the geopolitical tensions, such as the Israel-Hamas and the Russia-Ukraine conflicts. The IT companies also faced the issues such as the margin pressure, the talent shortage, the attrition, and the competition from the other players, such as the global IT firms, the Indian startups, and the captive centers.

According to Xpheno, a staffing firm, the collective headcount at the top 8 IT companies in India fell by over 17,500 in the December quarter of 2023, compared with the previous quarter. The data also indicated that the total staff count at these companies was down by 75,000 in a year, marking the sharpest fall in six years. The IT hiring was also sluggish across all levels, from freshers to experienced professionals, and across all domains, from software development to testing to support. The IT companies also delayed or reduced their salaries, bonuses, and incentives, to protect their margins.

The Recovery Phase: The Near Future

The IT hiring in India is expected to recover and resume in the near future, as the demand for IT services and solutions picks up again in the global markets. The IT spending by the clients is likely to increase, as the factors such as the interest rates, the inflation, the economic growth, and the geopolitical stability improve. The IT companies are also likely to invest and innovate in the emerging technologies, such as the 5G, the blockchain, the quantum computing, and the IoT, creating new opportunities and challenges for the IT industry.

According to NASSCOM, the Indian IT industry is projected to grow by 10.5% in FY 2025, reaching $250 billion in revenue, and employing over 5.5 million people directly. The industry is also expected to add over 2.5 lakh net new jobs in FY 2025, the highest in seven years. The IT hiring is also expected to be strong across all levels, from freshers to experienced professionals, and across all domains, from software development to testing to support. The IT companies are also expected to restore and increase their salaries, bonuses, and incentives, to attract and retain the best talent.