IT firms majors such as TCS, Infosys, and Wipro have again started hiring big numbers. It indicates demand in the market and recovery after the pandemic shock, which had led to a decline in the past quarter.
All major software companies have reported a gradual increase in their overall headcount for the July-September period. Traditionally, addition in headcount has been a strong indicator of growth for IT firms. However, it has been plummeting over the past few years because of automation (1).
“One the people front, we hired about 8,000 freshers virtually, and also increased our hiring support our growth. Our organic talent development investments also witnessed a surge in the learning effort during the quarter (second). Our retention continues to be a benchmark and a vital competitive differentiator for us, which is an all-time low.”
– Rajesh Gopinathan, TCS CEO (2).
Simultaneously, Pravin Rao, Infosys COO, stated that the headcount increase would be in line with the growth. In the present quarter, the company had 5,500 additions, about 3,000 were freshers in both Indian and abroad. The remaining 2,500 were laterals.
The company’s recall was much lower in quarter one of the current financial year. However, the hiring numbers were still on the lower side of the second quarter. Hence, hiring in the subsequent quarter, three and four would depend on the growth.
Even though Wipro has not offered any hiring guidance, its HR head, Saurabh Govil (3), told ET NOW that the company has a robust hiring plan in a recent interview.
Govil added that there is momentum in the market, and the company needs to gear up for growth. It has a robust hiring plan for both freshers and lateral. The company is looking for broad-based hiring across bands and geographies.
All three firms have announced salary increments and promotions for employees since their earnings for the second quarter came ahead of market expectations ahead of strong deals and increased digital adoption.
The Impact of Pandemic
It suffices to say that India’s top three IT firms have firmly put the COVID-19 crisis behind them, especially if hiring numbers serves as any indication.
Amid a robust revenue administration and the signing of big deals, Tala Consultancy Services, Infosys, and Wipro have reported a jump in net employee hiring in the December quarter.
Notably, TCS has reported a 59% increase with a net addition of 15,721 employees in the third quarter over the last quarter. The net employee hiring in Q3 was the highest ever in a quarter, stated the company’s CFO, Ramakrishnan (4).
In quarter three, Infosys observed an 8x jump in its net hiring to 9,104. Simultaneously, Wipro also observed a 47% increase to 5,065.
When the COVID-19 pandemic was at its summit, all three firms reported negative net hiring during the June quarter. However, all of them observed a turnaround in the September quarter.
The momentum picked up even faster in the December quarter, referring to the chart above.
The Vice President of a research firm, Everest Group, Yugal Joshi (5), stated that it is irrespective that the additions are coming at the back of not very encouraging previous headcounts; it is still a sure sign of demand visibility. Overall, it is also a good sign for the industry and probably an earlier-than-expected market recovery.
The pandemic has made several clients explore off-shore based outsourcing. Moreover, since everyone is going after cost-cutting, we observe that even high-end consulting services involve more overseas delivery.
According to Joshi, it would help Indian service providers generally and also particularly for India-based delivery.
Besides, the pandemic has helped generate newer operating models for service providers. Even though off-shore is an important part, there are more sides to it. Indian service providers should keep seizing their delivery and operating models.
Joshi added that they should not rest on the immediate large deals they observe as clients want to offload their resources to the Indian system integrators’ books.
“The net surge in headcount is no wonder considering the rebound in demand for outsourcing services amid clients warming up to seeking assistance for cost-effective run-the-business awards.”
– Boz Hristov, Professional Services Principal Analyst at Technology Business Research Inc. (6).
He further stated that the several big outsourcing deals across companies include rebadging employees, which has also bolstered headcount additions (7).
Blessing in Disguise
The coronavirus pandemic has been a blessing in disguise for the IT sector in India.
There was a surge in demand for IT services as businesses are going virtual. It has led to an uptick in hiring for hardware and software professionals.
“The Indian IT sector is one of the least impacted sectors in terms of hiring amid the pandemic.”
– Naukri.com, stated in a report, 19, November 2020.
According to the available data, the sector has observed an upward month-over-month recovery for job listings. There was a peak in September for hardware and software roles on Naukri.com, 63% and 20%, respectively.
In September, India’s overall unemployment was about 6.6%, rising to 6.98% in October. During the pandemic, India’s hiring sentiment was lowest in the past 15 years, with only 3% of firms looking to hire new employees, according to the recent survey of Manpower Group (8).
Nevertheless, companies like IBM, Cognizant, Tata Consultancy Services, Accenture, Dell, Tech Mahindra, Xerox, MindTree, and Adobe are looking for potential candidates, stated Naukri.com. According to available data, job seekers in Indian Silicon Valley, Bengaluru would give the highest opportunity volume (9).
Talent Trends 2021
According to Michael Page India, a professional recruitment services firm report, companies are now also open to considering talent remotely available.
The report titled ‘Talent Trends 2021’ indicates a stable recovery in 2021 with recruitment across industries.
“With the consecutive recovery of India’s economy and market, most tech firms are expected to increase headcount in 2021. We hope tech employment will bring a degree of stability and serve as a catalyst for overall business recovery.”
– Varsha Barooah, Director of Michael Page India (10).
According to the study, more than 71% of hiring managers believe that hiring skills and experience are essential.
With the overall demand for each level of tech roles are improving to pre-COVID levels, employers are more likely to compete for high potential professionals.
The report further stated that entrepreneurs with a stellar professional record, forced to close down their ventures amid pandemic, would also be back in the talent pool and available for key positions in growth startups.
Moreover, since mental health and well-being are emerging as essential considerations for a job in 2021 (11), 47% of the tech firms who participated in the study focus on remote and flexible work arrangements vital talent attraction strategy.
Hikes and Bonuses
As India’s top software service companies have resumed hiring, they also offered salary hikes and bonuses to staff as the pandemic accelerated businesses’ focus on digital transformation projects, leading to a surge in Q3 earnings.
The majority of the Indian IT firms have recently won several large contracts that would require significant human resources additions as clients are speeding up their digital and cloud projects to leverage the digital capabilities to serve customers and enable remote work.
According to EY India’s technology sector leader, Nitin Bhatt (12), the demand recovery is not a single-time event but a part of a multi-year technology upgrade cycle. It requires a skilled workforce that can sell and deliver digital transformation projects.
The war for talent is also inevitable, considering the scarcity of such skills in the market. Hence, companies are announcing salary hikes and promotions while also hiring fresh and senior talent, Bhatt added.
Notably, TCS, Tata Consultancy Services Ltd, India’s largest service company, was among the first to roll out increments for its 4,50,000 employees on 1 October 2020.
Other leading IT firms in India, Infosys Ltd, and Wipro Ltd, have also announced promotions and salary hikes in January. Moreover, Infosys is also fully paying out the variable salary component to employees for the previous quarter.
“As previously announced, we are initiating salary hikes for employees, effective from 1 January 2021. And we are expanding our promotion cycle across all levels in this quarter.”
– Salil Parekh, the CEO, and MD, Infosys (13).
Additionally, Infosys is also looking to hire 24,000 college graduates in the country in the upcoming financial year, up from 15,000 in the current fiscal.
Wipro has already initiated salary increased for all eligible employees in the B and B3 bands, effective from January. Notably, bands up to B3 makes up about 80% of Wipro’s workforce. It translates to approximately 1,45,000 employees out of its total staff of more than 1,80,000.
Wipro has also announced 100% variable pay linked to all its employees’ business metrics for December and March quarters.
Cognizant Technology Solutions Corp, with more than 200,000 employees in India, is looking to hire more than 23,000 people in the current year. It is indicating a 35% increase from the past year (14).
According to Brian Humpries, the CEO of Cognizant (15), the move would complement its lateral hires, emphasizing hiring new talent for their digital priority areas. It includes cloud, artificial intelligence, data, digital engineering, and the internet of things. The company is also planning to hire talent for its other strategic areas like salesforce, cybersecurity, and business modernization technologies.
HCL’s 700 Crore One-time Bonus
On Monday (8 February 2021), HCL Technologies announced a special one-time bonus to its employees. It was worth more than 700 crore INR as the IT giant marked its 10 billion USD, about 72,800 crore INR, revenue milestone.
The firm would pay a special bonus to its staff in February 2021. It would amount to nearly 90 million USD plus payroll taxes in some countries. The impact is excluded from the financial year 2021 EBIT, earnings before interest, and taxes, according to the guidance company provided last month.
The HCL statement stated that it is issuing a one-time special bonus to its staff globally worth more than 700 crore INR to recognize its recent milestone crossing the 10 billion USD mark in 2020 revenue.
“In celebration and gratitude, all employees with one year of service or greater will receive a bonus, the equivalent of ten days’ salary.”
– HCL Statement (16).
Apparoa V V, the Chief Human Resources Officer of HCL Technologies (17), stated that every HCL family member had shown strong commitment and passion despite the struggling times amid the coronavirus pandemic. They have contributed significantly to the organization’s growth.
Apparo further added that the 10 billion USD revenue milestone is a testament to its remarkable resilience as an organization and the spirit of the company’s over 1,59,000 employees.
It is worth highlighting that the IT service firm has posted a 31.1% rise in its Q3 net profit at 3,982 crore INR. HCL is riding on strong momentum in its digital products and platform segments. The company also has exuded its confidence of clocking further acceleration in bookings in the upcoming fiscal quarters.
Overall Hiring and Hikes in 2021
It has almost been a year of the pandemic; trends in their nascent form in the latter half of last year are becoming clearer.
For instance, healthcare, life sciences, fintech, and tech firms observe a robust growth, tailwind the growth from the previous year.
According to the Michael Page ‘Talent Trend 2021’ report, tech firms are looking to expand their staff strength by at least 14%, including anyone open to working full-time remotely.
As per the report, some of the roles witnessing higher demands include engineering and data scientists, performance marketers, growth hackers, sales and business development, research and development, and legal counsel.
Other areas observing an upward swing includes leadership hiring in private equity, venture capital, and other asset classes.
Let’s consider the fact the people would continue to interact and manage the team virtually. The hiring priority will focus 69% on skill set and experience match, 48% on culture fit, 31% on talent cost, 13% soft skills, and least priority 12% to candidate’s location.
Even though the pandemic has brought several work-life changes, remuneration and benefits would continue to be the top factor in accepting a job. The candidates would also focus on scope and responsibilities, work culture, future internal growth opportunities, and company brand and reputation.
According to the report, technology would offer the highest salary increases to new highers up to 15 to 25% in 2021. It is followed by the healthcare and life sciences sector with salary increases up to 15 to 20% increase in the upcoming fiscal year.
Moreover, companies have also started to look at a dynamic working culture and competitive remuneration and benefits package to attract talent. The trend is most likely to continue in 2021 (18).