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Indian IT majors back on a hiring spree
By Indrajit Basu
KOLKATA - The excitement is muted but definitely palpable. From talks about September 11, communal riots in Gujarat, and more recently the impact of the travel advisories resulting from the recent India-Pakistan border tension, conversation among IT honchos is fast shifting to billing rates, client presentations and most importantly, manpower ramp-up.
Though it may not be celebration time just yet, the makings of a revival are definitely in the air. Recruitment offers that were deferred last year have started pouring in and with 11,200 new jobs - and counting - on the cards, IT pros have started smiling again.
After an almost 18-month hiatus, corporate India is back with its hiring sprees and leading them are obviously the IT biggies. For instance, recently, Reliance Infocom unveiled plans to hire up to 5,000 heads within the next six months, taking the total number of employees to 7,500 by the end of this year.
And Infosys Technologies has announced its plans to recruit 1,000 people in the current quarter (July-September 2002). The company added 772 employees during the first quarter (April-June 2002) on a gross basis, but excluding 144 lateral hires included within, the net addition at 566 for the quarter is still a significant jump over the meager 75 in the previous quarter.
Yet another IT giant, Wipro Technologies, India's second-largest software exporter, also recruited more than 1,000 professionals in the first quarter (April-June) of the current financial year, and this exercise, according to its president Vivek Paul, "was in line with the company's strategy of going in for need-based recruitment". Reports suggest it could add 2,500 new hires again in its forthcoming development center coming up in Kolkata, the capital city of eastern India.
India's top software company Tata Consultancy Services (TCS) isn't lagging behind either. In June, TCS disclosed plans to hire about 3,000 software professionals this year, adding to its existing staff of over 19,000.
"The pace of hiring could pick up," said Sunil Mehta, vice-president at the National Association of Software and Services Companies (NASSCOM), adding that "the utilization rate of the top Indian software companies was 60 percent to 65 percent and that is slowly inching up". According to him, the current utilization rate is around 75 percent. "Volumes are also simultaneously increasing. We, therefore, will see an acceleration in recruitment by the end of the third quarter of the fiscal ending March 2003," he said.
But the hiring spree in the country doesn't quite stop with the top Indian companies. Some 18 middle-level IT companies and a few of the global giants such as Intel, Cognizant and Oracle - which incidentally plans to double its manpower strength to 4,000 within the next few years - along with assorted other smaller companies could increase India's payroll strength this year by 20,000. That's an increase of around 10.41 percent (India's total software workforce as of 2001-02 stands at 1,920,000, according to NASSCOM).
The latest hiring binge is a startling contrast against the backdrop of the global IT sector, which reportedly downsized 400,000 jobs last year and a thousands more in the current year.
Why, then, are Indian software companies on a recruitment binge?
According to Hrishi Modi, investment analyst at ASK-Raymond James Investment Management, increased outsourcing to India by US-based companies is the central story behind the sudden activities of the Indian IT companies. "The main reason is that US companies are looking to move from high-cost vendors to low-cost vendors," said Modi, adding that "this year Indian companies could well start taking away market share from US companies. That's the reason why top Indian software firms are still growing, while US IT services revenues are under pressure."
Indeed, according to analysts, although US tech spending increased by 12 percent in the second quarter, sequential growth prospects still do not look too good there. For instance, in its June update on IT services, Merrill Lynch saw no sequential growth in the second half of the current year for major IT services companies.
Against this trend, NASSCOM's latest survey of the Indian IT sector reveals that listed IT companies have reported a revenue growth of 22 percent to 24 percent in the first quarter of the current fiscal. Moreover, these companies have posted a sequential growth of 6 percent to 7 percent in the April-June 2002 quarter over the January-March 2002 quarter.
According to NASSCOM, this topline growth is significantly higher than the consensus estimate of 3 percent to 4 percent or the lows of the past few quarters and comes despite the US economy not doing significantly better.
"Thus, against all odds, Indian IT is managing to grow," said Sunil Mehta, "which means that current growth and employment opportunities wouldn't be a blip either."
Although the IT sector (which includes software and IT-enabled services sectors such as call centers, business process outsourcing, etc) is leading the pack, it isn't the sole contributor to the country's recruitment boom. Headhunters say that auto and fast-moving consumer goods companies are adding to the boom. According to them, every car company is coming out with variants, which means more jobs are being created.
Nevertheless, even as war clouds have receded over South Asia, and companies, headhunters and executives are beginning to smile again, "India could still be a while away from uncorking champagne bottles," said Sujit Sen, a headhunter with a prominent consultancy firm. "The next few months will decide whether we can take an optimistic or a cautiously optimistic view."
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