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.