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Indian IT firms rethink campus recruiting

Top-tier Indian IT firms' hiring patterns hint at big changes in the way companies look at campus hiring.

Engineering campuses have been the biggest hunting ground for talent, supplying IT companies with cheap engineers and forming the solid backbone for their labor arbitrage strategy. In the past decade-and-a-half, these companies scrambled to arrive early at India’s biggest engineering schools and lock in thousands of engineers whose low salaries ensured extremely competitive services offerings.

But the global business environment has changed, and so have industry business models. The campus bulk-hiring frenzy has dampened somewhat.

"Today's business environment is volatile and dynamic; there is no clear growth visibility beyond a couple of quarters. Companies realize that staffing rampantly and keeping large bench sizes is not viable," said Sangeeta Gupta, senior vice president of research at India’s IT industry trade body, NASSCOM.

Last year, India’s $100-billion IT services industry slowed to its historically lowest growth rate of 11 percent. Headcount grew at an even lower rate -- by 8 percent. This year, NASSCOM has forecasted a further slowing in hiring momentum even though industry growth is expected to be slightly stronger at 12 percent, Gupta said.

Additionally, companies are deploying their resources more efficiently. A decade ago, when companies worked on the traditional hire-more-to-grow-more model, top IT firms employed about 40,000 engineers for every $1 billion in revenues earned. Today, data shows that companies need only add about half that number of engineers to tote up each extra $1 billion to their revenues, as revenues get linked to customers’ business outcomes.

The campus hiring slowdown is in-your-face visible. Earlier this month, India’s fourth largest IT firm HCL Technologies (whose long-standing slogan is "Employees First") faced ignominy as hundreds of campus recruits arrived at its gates, staging a mini Tahrir Square-type demonstration. Some of them had been given offer letters 18 months ago but have no joining dates yet.

Other top companies too have lags, where the typical practice was to on-board fresh recruits within the same fiscal year. For instance, India’s second largest IT services firm Infosys made 27,000 offers in end-2011. In a normal business climate, all of these engineers would have joined by mid-2012. Last  week, an Infosys spokesperson said the company expects to complete on-boarding by September 2013. These types of 18-months gaps were unheard of earlier.

Chastened by the HCL drama, top-tier IT companies are adopting a further rethink campus recruiting route even though it provides cheaper, surer access to talent.

All this does not augur well for job seekers. India produced 650,000 engineers three years ago. The number of engineering colleges has grown, and over one million engineers will spill out into the job market this year.

NASSCOM, meanwhile, is gearing up to announce a new strategy to build occupational standards for the industry. It has defined 100-plus job roles such as systems engineer and database engineer detailing every skill required for each. These role definitions will be fed back to colleges and universities to build job-based curriculum.

Companies are drastically cutting down campus offers, as they tune their talent supply to dynamic business demand. Many prefer to do off-campus, just-in-time hiring of freshers (where colleges or universities round up and march all recent graduates to the company’s selection process).

Top–tier firm Cognizant Technology Solutions has used a combination of in-campus hiring and off-campus (consolidated) hiring to meet its business demand. “Because of the increased availability of quality talent, we see growing use of the off-campus mode by the entire industry,” said Sriram Rajagopal, Vice President and Head of Human Resources, India and APAC, Cognizant.

Zero hour recruitment should certainly help companies avoid the embarrassment of seeing placard-waving protestors while customers are in the campus.

About

Saritha Rai is an India-based journalist and commentator who covers technology, business and society from her ringside seat in Bangalore.

7 comments
Nishidh Shah
Nishidh Shah

Yeah....Good News for all IT Workers. Here you mention about HCL and Infosys detail, Can I know the same details regarding TCS(Tata Consultancy Service).

a_vagga
a_vagga

Indian IT has not been providing cheap labor BUT world class technologists and solutions, which incidentally come at a lower price... I have worked for 13 years, both on-shore and off-shore, and fail to understand why customers continue to give more work to Indian IT if they have a bad name... Sony corporation came to world prominence with their world class products in the 50's and took the western world by storm... not sure, which crappy products is being referred to in other comments... Every major financial institution in the world is running on software designed/written by the so-called 'Cheap labor' and are mission-critical systems doing their job without fail... every major Indian IT player adheres to CMMi standards for their development process... not sure why fellow commentators forgot about Finacle, which is now an Oracle product... Indian IT firms may not be creating products that are known to laymen, but they develop large no. of assets that are re-used in major deliveries.... Product companies have product divisions in India and the 'Cheap labor' contributes to many popular products but their contribution un-published... No other nation has been able to compete with India in software development capability in the past 25 years... India has been the early adopter and that was possible only because of some fine visionaries... so what if they don't create products

AngloThaiSolutions
AngloThaiSolutions

India has been the bargain basement for cheap development and support for well over a decade now. It now has a vast IT workforce. However, just like Japan in the 50s and 60s, Hong Kong in the 80s and 90s, and China (main land) today - there becomes a point when being known for "cheap and dirty" needs to move on to "excellent products". Think Japan in the 50s and 60s - they made the worlds junk, crappy cars and bikes, cheap electronic that broke in days, semi-dangerous toys etc - Japan turned this around and are now known for not-so-cheap, but often excellent electronics, cars, etc. India's success needs to move it on now - it needs to improve its other global interests and use its IT base to do it. It needs to concentrate on making a product or get out of the game - the economics will force this anyway (as it is). Indian workers want to see more of that $Bns and the cream will slip away to other employers (countries) that offer them the parachute (this is already happening, but will only escalate as economies pick up again). Indian IT really has a pretty bad name in the industry outside of India (trust me on that you Indians - I have worked for 30 years in the western Blue-Chip IT arena), it is the bottom line that has sold them in the past (the massive move to outsourcing to the cheapest provider along with directorships average board time reducing to just 2 years or so from long term - i.e. directors save the bottom line, and jump to another board as soon as the bonus comes in and before the impact is realised) - much of this short termism is coming back to bite now, big companies will think twice next time - India needs to move on so that this becomes less of an issue ("Oh, that was old Indian IT...")

my_bit_bucket
my_bit_bucket

While the title lured me into the article but reading the first few lines with words like "cheap engineers" and "labor arbitrage" left a bitter taste... and I would not want to continue reading. Not sure if its the Indian IT industry which is projecting themselves so low or the analysts who do not understand the worth and portray them mean!

albayaaabc
albayaaabc

Last year, India’s $100-billion IT services industry slowed to its historically lowest growth rate of 11 percent the return bag to slowest economy technology lead to boom after that so let second quarter in IT engineering talk.

TheLip95032
TheLip95032

THe reality is global companies ( including Indian) recruit Indian engineers because they were a cheap source of labor. Now that the costs are increasing companies are looking elsewhere (South America). It has always been this way and don't see that changing anytime soon. I think companies now have a "do more with less" approach which will make the career of an engineer not as attractive as it once was.

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