“It’s quieter this time,” said Sudhir Yadav, proprietor of a photocopy centre within the campus of a tier-2 engineering college in Pune.
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“The buzz around placements is always different from chaos around exams and submissions. Last year, students were really upbeat. But this time, the number of people who are eligible for placements is lower, apart from the number of placement drives itself,” said Yadav.
During large campus placement drives by the IT majors, photocopy centres overflow with students printing notes and resumés. But this year, companies have either not visited campus yet or evaluated and picked fewer candidates, said Yadav.
“Final year students are busy discussing plans related to higher studies and extra courses rather than CVs.” It’s not surprising, considering that cumulatively, the top four IT majors have shed their headcount by 37,299 over the past two quarters.
This compares to an addition of 81,678 during H1 of the 2023 fiscal. In many cases, companies have deferred fresher onboarding by over a year.
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Deepti*, a final year engineering student at a Navi Mumbai college, said that when she chose civil engineering in 2020, she was told that her stream would not matter in four years’ time because everyone with decent scores gets a shot at applying for IT companies. “My family is from rural Maharashtra. My sister is a mechanical engineer who got placed with Infosys in 2019. She funded a third of my course fees but the rest was managed on loan,” she said, adding that she was worried about the financial stress on her family if she had to wait for too long to start earning after graduation.
However, in the current placement environment, the few IT companies that visited her college campus have insisted on core IT-Computer science stream students only, making her ineligible for these jobs. “And we all know how difficult it is for women to land a job with core civil engineering companies,” she said.
CP Johnson, senior director at the Centre for Development of Advanced Computing (C-DAC), Mumbai, has witnessed a rapid change in the talent demand environment within a very short duration.
“We are a finishing school for people seeking jobs in the IT sector. Students come here after graduation when they don’t land jobs during their college campus placements, mainly from engineering backgrounds,” he explained.
He added that until 2022, even through the pandemic, companies were recruiting these industry-ready students rapidly, irrespective of their core engineering streams. Demand peaked in May 2022 when the institute achieved 100 per cent placements in record time for a batch. The next batch that graduated six months later witnessed a reduced demand with around 70-80 per cent students landing jobs.
Companies have become more stringent with their selection process. However, C-DAC students who prepare and perform well during the course are still preferred by the companies, he added.
“Many of our students come from remote places, they are the first people in their families to aim for an IT job. Many have taken loans to study engineering and need jobs immediately after graduation to support their families,” said Johnson, urging companies to take part in the campus drive and recruit these students.
According to industry estimates, an average four-year engineering course, even in tier-2 colleges, costs around Rs 8-10 lakh as of 2023. This compared to around Rs 2-3 lakh for the same courses a decade ago. Entry-level salaries across top Indian IT majors ranges between Rs 3.6 to 6 lakh, similar to what it was a decade ago, with a majority meeting the lower end of this range.
Currently, IT companies visiting campuses have a requirement for students to have 75 per cent aggregate marks or equivalent grades.
“….Companies are more inclined to offer higher salary hikes at midlevel management compared to entry-level salaries,” said Krishna Vij, business head for IT staffing at hiring firm TeamLease Digital.
The industry is anticipated to hire 40 per cent fewer freshers in fiscal 2024 compared to the previous year, as IT companies plan to significantly reduce their campus visits during the placement season, she added.
Vikrant Waghmare, training and placement officer at KJ Somaiya College of Engineering, Mumbai, said that for this year, companies visiting campuses have enforced strict academic criteria.
“They prefer candidates with good academic and life skills. And since most companies have reduced their intake, they are focusing on candidates who are graduating with core skills and have excellent problem-solving abilities,” he said.
Waghmare added that while a majority of their students from the 2022 batch have been onboarded by their companies, in the cases where the students have experienced unusual delays in onboarding, the institute has helped them find alternative placement opportunities.
“Students are also well aware of the delays in onboarding. The institute encourages them to utilise the time for upskilling and personal development in order to make themselves more competitive and adaptable for their professional journey,” said Waghmare.
The sector has previously witnessed negative headcount growth and delay in campus visits during the 2008 global financial crisis — a black swan event in the global economy. The situation was not even so bad after the pandemic struck.
In fact, Q2 saw the highest headcount dip reported by TCS in at least 15 years. Meanwhile, Infosys has indicated that it won’t be visiting campuses until it sees a demand uptick. Wipro said it has a backlog of freshers from the previous fiscal and will prioritise them. HCLTech expects to add 10,000 freshers this year, having onboarded 3,630 in the first half.
In fact, many college placement officers and students said the current batch of students are steering away from companies that are yet to onboard its batches from 2022. However, some of the parents and students said that this was a “luxury” that only students from premier colleges could exercise because they can expect other non-IT recruiters on campus.
For almost three decades now, a job in the Indian IT services has been the aspiration for millions of Indian families. It’s a ticket to the corporate sector, hopefully with an onsite component that can help families climb the social ladder rapidly.
It follows a demand cycle though there have been seasons of low demand in the past. But the only other time when the top four companies reported a headcount dip together was the first quarter after the pandemic started, and all hiring activities were on pause. The companies reported a collective dip of 9,144 during that quarter.
During the 2007-08 down cycle, a lot of job offers were revoked but companies did not forgo campus visits altogether. And plus, there was an actual recession then, unlike the current cautious environment.
“Unless there is a major round of hiring that happens in the next two quarters, we expect the companies to end the year on a minor negative headcount growth, which in turn will have a huge ramification on fresher hiring for the next fiscal,” Xpheno co-founder Kamal Karanth told ET.
“Around nine lakh engineers graduate every year and even in the worst case scenario, around two lakh get placed across the IT services sector. These are people outside the tier-1 colleges. It is these two lakh fresher jobs that will be at risk.”
While GCCs go for the top layer of tech and business talent, their intake numbers are limited and do not match that of the services cohort, he added.
Top IT firms like TCS, Infosys, HCLTech and Wipro are increasing their profitability even as they are struggling to grow in a weak macroeconomic market.
This comes as Infosys, HCLTech and Wipro have slashed their revenue guidance for the upcoming quarter and full fiscal amid freeze on tech spends and delay in decision making.
Experts said that companies are using this downturn to go back to the basics on cost management and are increasing employee productivity to squeeze out better margins without growth.
Analysts added that companies are likely to successfully manage the necessary short term margin improvements since attrition has fallen and companies are saving on hiring costs. They also have a large bench of employees created over the past few years.
The companies had hired in huge numbers between FY21-FY22, giving them the necessary runway to build on higher utilisation of talent, said experts.
A muted campus placement season in 2023-24 could have multiple repercussions through the academic and hiring ecosystem. For instance, Nandkishore, a second year mechanical engineering student from Ahmednagar, is desperately looking out for internship opportunities with Pune-based IT companies at a stage in his academics where he doesn’t need to.
“My friends are also looking for internships. Seniors have told us that the sooner we get internships, better our chances of being absorbed by those companies in the future when we graduate,” said Nandkishore, adding that his training and placement officer has suggested focusing on academics and additional skills instead.
“It is confusing because we don’t know what the demand environment will be like when we graduate. So, most of us are trying to cram as much into a CV as possible,” he added.
Vijay Sivaram, CEO, Quess IT Staffing, expects some impact on current batch placements. However, he added that the ecosystem has changed significantly from what it was pre-pandemic.
“Freshers can join online courses in ML, AI and GenAI, making them better candidates. And this applies to students even in tier-2 and tier-3 institutes. Such skills will make them eligible candidates,” he said, adding that this is mainly a single year event that could change within five to six months towards the end of the fiscal.
Shantanu Rooj, founder and chief executive of TeamLease Edtech, said that the mood across campuses is down because IT services companies will be largely absent, but there is also hope in the fact that an increasing number of non-tech companies are hiring for IT roles.
“The campus placement expectations have moderated, but with a lot of GCCs and non-tech companies ramping up their backoffice and technology operations, there are alternative opportunities,” said Rooj.
Colleges have started recognising this opportunity. For instance, Samuel Rajkumar V, director of Career Development Centre at Vellore Institute of Technology (VIT), told ET that the institute is focusing on getting more GCC companies to its campuses.
“Last year, out of 900 companies that came, 375 were GCCs. This year we are targeting to add another 200. So, we are trying to reduce the impact of the lacunae from IT services firms not hiring,” he added.
The demand for talent outside the premier institutions is gaining ground among GCCs as well. As part of Morgan Stanley’s campus strategy, Chakra Mantena, MD, head of technology global centers, explained that the company recruits for several universities including the top IITs, BITS, and NITs (National Institutes of Technology) and a few select campuses in the country.
“We realise that there is good talent in other colleges too. To tap into that pool, we also have open placement where students from any college can take our online test and qualify to interview with us,” said Mantena.
However, between the non-IT services companies expanding their footprint deeper into the country and the IT services providers themselves figuring out their demand cycle, at least two batches of engineering graduates in the country will continue to worry about their future in an industry marred by wars, recession and uncertainty.