Recruitment sector plods through a gloomy quarter

MUMBAI : Hiring activity cooled in tech and retail sectors in the December quarter as companies cut hiring mandates and reduced sub-contracting costs, while banking recruitment stayed flat and manufacturing saw a minor uptick.

While hiring in the IT and startup sector is down to the levels of June quarter of 2020 when a strict lockdown was in force, retail and packaged consumer goods mandates are almost 20% lower from a year ago, recruiters said. However, manufacturing and automobile industries have shown some growth in hiring.

“Hiring in IT companies and startups has fallen by 40% when compared to the October-December period of last year. In fact, in IT, recruitment numbers are now similar to April-June 2020 when a lockdown was on,” said Kamal Karanth, co-founder of Xpheno, a tech recruitment firm.

After a year of frenzied recruitment that led to excess staff, many IT companies and startups have paused hiring due to budget crunch and poor visibility on deal pipelines. Recruiters for IT services companies are also worried that their sub-contracting costs will get reduced. “…productivity, utilization and in the given environment, the subcontractor costs also, continue to be levers in Q3 and Q4,” said Samir Seksaria, chief financial officer at Tata Consultancy Services (TCS) said during the company’s September quarter earnings announcement.

Wipro’s chief human resource officer Saurabh Govil told Mint in October that the company will “hundred percent” look at sub-contracting costs, which includes payments to vendors and recruiters. “In an environment when there is low growth, we are looking at cost structure that includes pyramids, layers, onsite-offshoring, sub-contractors , productivity. We are looking at every aspect of cost,” Govil said.

Many HR firms expect hiring activity only in the first two months of the December quarter to meet their targets, since global firms go on a furlough period in the second half of December. The festive season starting September is when retail firms hope that the hiring numbers will tide them over. But those hopes were dashed this year.

“Retail hiring was down by 20% for middle and senior management in the fiscal third quarter, compared to last year. The hiring uptick during the festive period took place in the temporary staffing section, but otherwise, it was muted,” said Shiv Agrawal, managing director of ABC Consultants. Retail and packaged consumer goods firms rolled out marginal hikes to their sales teams and tapped into smaller towns for more affordable talent this festive season. ABC Consultants estimates its IT hiring numbers will close at 50% lower by December versus last year.

In a gloomy scenario for hiring, manufacturing offers some bright spots. “There is a marginal 3-5% increase in the manufacturing sector propelled by the auto industry when compared to the third quarter of 2021-22. Since the products for the festive season are made a few quarters earlier, the hiring when compared to the first and second quarter is down by at least 10-12%,” said Aditya Narayan Mishra, the chief executive of recruitment company CIEL HR Services.

The banking sector, which had seen high attrition of over 40% in marketing and sales divisions, is also preferring to recruit from campuses for talent in digital initiatives than hire from the market. Hiring from the market is at least 30% more than building a talent pipeline from within.

Lohit Bhatia, president, workforce management, at Quess Corp said in the BFSI sector, hiring mandates are similar to last year.

In the middle to senior levels, lateral hiring is slow this season, given that both job-seekers and hiring managers’ availability is constrained during the festival and furlough periods.

“Since October, there has been a notable shift in the BFSI and fintech sectors. While the overall number of companies with job openings has decreased by 15%, those that are hiring are offering nearly twice as many positions as before,” said Kartik Narayan – CEO Staffing : Teamlease Services. “This surge is particularly evident in roles related to credit cards, home loans, and microfinance. On the other hand, there’s a noticeable decline in openings for back office staff, customer support, MIS, and document collection executives,” he added .

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Updated: 16 Nov 2023, 12:20 AM IST

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