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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."
(©2002 Asia Times Online Co,
Ltd. All rights reserved. Please contact content@atimes.com
for information on our sales and syndication
policies.)
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