There's good news on the hiring front for the IT sector, which had reportedly seen more than 56,000 employees laid off last year. The buzz is that the industry now looks set to record the fastest growth in three years.
According to Mint, the country's top five software services providers - Tata Consultancy Services (TCS), Cognizant Technology Solutions, Infosys, Wipro and HCL Technologies - collectively added 24,047 people to their workforce in the first quarter of this fiscal. In comparison, the last fiscal had seen just 13,772 net additions, the slowest since the offshore outsourcing boom started at the turn of the century.
In fact, the June quarter net additions of the above five firms are the highest in at least two years. They had collectively added 26,565 people in the three months ended June 30, 2016 (Q1).
Analysts attribute this turnaround to three factors:
1. Companies are looking to spend more on outsourcing technology work
2. Fortune 1000 companies are using data analytics platforms offered by information technology (IT) vendors to run their business better, which is translating into more work for the outsourcing companies. At least for now.3. Companies are increasing their spending on digital technologies, which has led to more contracts valued at over $1 billion. For example, TCS has bagged three mega deals since December, raking in $5.6 billion in revenue. And last week, Bengaluru-based Wipro won its largest contract valued at $1.6 billion.
Although all IT firms are moving away from a people-led model to a platform-based business approach, hiring by the largest IT firms continues to be a dominant indicator of their prospects. The five firms together employed 1.17 million at the end of the June quarter.
"For all the five companies, digital is now a fourth of total revenue. So, without getting into the debate of digital definition, the heartening thing is that quality of revenue is only improving," an executive at Cognizant told the daily.
In a similar vein, a senior executive at TCS said that growth was back in the sector. "Companies were always spending more on digital in the past. But now, what we are seeing is that if the traditional business can be done efficiently."
The daily added that though TCS does not provide a growth outlook, it is expected to cross 10% growth this fiscal, compared to dollar revenue growth of 8.6% last year. It ended the previous fiscal with $19.09 billion in revenue.
The mood in the sector now is best summed up as cautious optimism, since the uncertainty in the many of the first-of-its kind of projects currently underway at the top firms could pose a hiccup. "The work in areas like IP [intellectual property] platforms runs the risk of IP infringement cases. You are offering data analytics solutions when debate on data privacy is gaining traction. The promised benefits from automation will be tested," said the Cognizant executive, adding, "Any incidental issue and this can blow up, making many clients hold back on spending in these areas".
To end on a more positive note, NASSCOM expects the the industry add one lakh new jobs in the current fiscal.