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The days of ‘big bang’ hiring by IT firms may be over



‘Trespassers will be recruited,’ an adage that defined the hiring needs of India’s $120-billion IT services space in the last decade may no longer hold true.

All indications are that frontline companies may hire fewer staffers going forward as they bring increased automation internally and deal with emerging platforms such as social, mobile, analytics and cloud (SMAC).

Q3 blues

For instance, Tata Consultancy Services, Infosys and Wipro have collectively created 11,664 new jobs in the third quarter against 19,298 in the second this year. “The third quarter has never been a strong quarter for hiring… However, the days of ‘big bang’ hiring are behind us and focus will be on continuous re-skilling and retooling,” said Sangeeta Gupta, Senior Vice-President at industry body Nasscom.

In the third quarter, TCS led the pack with 4,868 new staffers, while Infosys and Wipro reported additions of 4,227 and 2,569, respectively.

On a year-on-year basis, the top three IT firms have seen a considerable rise in new jobs from the 2,826 new jobs for the December 2013 quarter. (The collective hiring numbers for December 2013 appear modest despite TCS adding 5,463 new staffers as Infosys and Wipro had recorded a net headcount reduction of 1,823 and 814, respectively, then.)

Sanchit Vir Gogia, founder CEO at advisory firm Greyhound Research, believes that automation and machine to machine (M2M) communication will ensure that the IT services industry would not need as many people as before.

Automation refers to tools that can perform basic IT services without human intervention, while M2M allows both wireless and wired systems to communicate with other.

The lack of human presence in both scenarios disrupts the traditional global delivery model followed by home-bred software services firms. Global IT services firms such as IPSoft and Blue Prism that specialise in autonomics have started taking over several customers of traditional Indian software exporters.

This has compelled companies like Infosys to sign revenue-sharing agreements with IPSoft and others.

Thus, the industry’s linear business model, which equated revenue with number of resources billed, is being altered.

Axing staff

Initial signs of this shift are already on display.

TCS recently admitted that it will terminate the services of around 1 per cent staffers this year, many of whom are believed to be mid-managers. The means that the axe could fall on over 3,000 ‘underperformers’, as the company had 3,18,625 staffers as on December 31. Media reports have indicated that IBM and Wipro have also been trimming their headcount in India as they seek to cut flab.

“Over time, middle management at IT companies would thin out due to increased adoption of M2M communication, automation and so on. Companies will prefer to operate with younger people with some experience and sales folks who can fetch in business,” Gogia said.

Focus on re-skilling

The new reality means that employees across all levels will have to re-skill themselves and be abreast with the latest in technology.

“Earlier, if there were multiple people at every level of a project transaction, going forward there would be fewer people handling multiple roles. Focus will have to be on mastering new skills for employees across levels so that they do not become redundant,” said Sunil Goel, Director of HR consultancy firm GlobalHunt.