As per a survey report approximately 1.1 million students enrolled in CS engineering courses across the country in 2021, and the number has only grown in the past years. The IT industry hires most of these fresh engineering graduates and a fraction of them get a decent placement package. Barring the exceptions from the IITs and a few private institutes, a NIRF report by the Ministry of Education, the average package for an engineering graduate was Rs 4.57 lakh pa.
But even this has been in jeopardy with the recent stagnation in hiring by major recruiters in the country. For Q1 2023, the six leading IT services in India – Tata Consultancy Services (TCS), Infosys, HCLTech, Wipro, LTIMindtree, and L&T Technology – witnessed a drastic employee contraction of 18,000 worse than negative 9,000 in the June quarter of 2021 during the pandemic.
According to data from TeamLease, the Indian IT sector will hire 40% fewer freshers as compared to FY23, when they onboard only 2,50,000 engineers. The placement season for the IT industry begins generally in August – September month, but this year they weren’t present on the campuses.
Placements are usually over by November but now it may extend to Q1 2024 due to repeated delays by the major firm.
A Shift in Priorities
An additional trend being seen in the industry according to a report by Business Standard is that the major recruiters are avoiding hiring from private institutes in Tier 2 and Tier 3 cities which have the most engineering students in the country. The standards of the companies have increased in terms of skills and are being pickier in choosing candidates, and interestingly tech startups are the ones which are filling the void left by big companies. But for obvious reasons, they do not pay as well as the big companies.
Tech Startups to the Rescue
The reason for this hiring stagnation and changes in trends is probably because of the reduced or stagnant revenue growth for the IT companies. In 2022, the US accounted for 62% of India’s total IT software and services exports. This itself is enough for us to realize one of the important reasons behind the delayed hiring by IT companies. With inflation still being a major crisis in the US and discretionary spending on the low, Indian IT companies are facing slow growth because of macro headwinds and tech spending being pulled by clients.
A Glimpse of Hope
Leaving aside the short-term despair being faced by the upcoming graduates, we can expect the situation to normalize by Q1 2024 when the activity for the IT industry picks up pace. With Gen-AI and artificial general intelligence being on the rise, the current phase is the perfect opportunity for IT companies to undergo re-structuring and re-training of their employees to build their capacity and most of them have already announced their plans to do so.