The effect of the slowdown in IT hiring is now visible in the numbers of recruitment companies as well, with Info Edge, the owner of jobs portal Naukri, the latest to call out the slowdown.
The company has said that its growth in billings is being impacted due to the slowdown in IT hiring while the rest of the economy is solid. Speaking to analysts, Chief Executive Officer Hitesh Oberoi said that global concerns are likely to impact prospects of clients in the IT services space, although they are optimistic about hiring by captives and global capability centres (GCCs).
The cautious spending by Info Edge’s IT customers on hiring is in line with the slowdown in net addition numbers given by India’s top IT companies, with there being a 69 percent drop in net addition numbers in FY23 as compared to the preceding year. Net addition is considered an indicator of demand, and all IT majors have signalled caution about the demand environment. Most have not committed to fresher hiring targets either.
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Info Edge stating that the recruitment business is witnessing a cautious spending environment from its IT customers is significant as 50 percent of the company’s recruitment billing comes from IT, and the remaining from non-IT.
Oberoi expects IT hiring to remain slow for at least 4-5 months, and hopes that it will recover in the second half of the fiscal. With non-IT recruitment being strong currently, he said it could be challenging for the company if the economy turns.
He added that 30 percent of the company’s business comes from recruitment firms that hire for IT companies, which get impacted first when there's a slowdown as their services are expensive, leading to their spend on Naukri reducing.
Oberoi said that IT hiring, which has been slumping for the last few months, will continue to be slow for at least a few quarters, and its unclear if it hit the bottom so far.
“We expect things to continue to be like they are for some more time. A lot will depend on what happens to the US economy,” he said.
While it has previously happened that Indian IT starts to benefit during slowdowns as companies that want to cut costs in the US lead to more jobs being outsourced to India, Oberoi said it is hard to say if the same will happen this time around.
Oberoi hoped that the boom when it comes to AI will end up creating more opportunities for Indian IT services going forward. However, with regard to the recruitment business, he said it is unlikely that the company will hike pricing in IT.
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