Recent developments in the US financial markets have had a direct impact on other sectors and countries across the world. Economies like India’s are slightly more insulated than others owing to the tight regulatory environment. However, export industries like IT and BPO, which are globally integrated, will surely see some impact. Despite this, we will still see growth, even though it may be a slightly lower than the 30 per cent-plus we have seen in the past. This industry’s foundation is human resources and growth—linear or lateral—and this will necessarily mean more hiring. The impact of the slowdown may remain for a few quarters after which growth will be back.
To put things in perspective, the Indian IT-BPO industry currently employs two million individuals directly, an increase of about 389,000 professionals over financial year 2006-07 and indirectly supports another 8-9 million people. Of these, almost 700,000 are working in the BPO sector alone and these are individuals with science and arts backgrounds. IT services (including engineering services, R&D and software products) exports, and the domestic IT industry provide direct employment to 860,000 and 450,000 professionals, respectively. The average age of employees in this industry is around 27 years.
If we were to take a look at this industry’s contribution, it has taken over the responsibility of training and “finishing” of the workforce— with 16-18 weeks of robust onthe-job training, even as India’s education system reforms itself. On an average, the top 10 companies hire in excess of 20,000-25,000 individuals every year from campuses in a staggered process, since no campus has the capacity to absorb all these candidates at one go. These candidates are then trained to deliver at a global competence level. The industry then offers them a world class work environment, where they service global clients and work on cutting edge technologies. These factors go a long way in adding to the experience of the individual in the long run, and are unique to our industry.
In recent times, there has been a lot of hearsay about lay-offs and employment scenario, though there are very few specific examples of the same in the IT industry. It is important to view these through an educated viewpoint. Given the current economic downturn across the world, companies will tread cautiously and the industry will raise its entry bar. This is because India has over the years attained a leadership position in this space. The customer expectations are high and hence, the industry must meet the standards, if not exceed them.
NASSCOM’s preliminary research indicates that although there may be a slight impact on new hires, we will continue to hire. This is good news.
We have noticed certain trends that are likely to guide and set the tone for fresh recruitments in the industry. These include lowering of attrition levels by 6-7 per cent compared to existing levels, which vary from company to company; broadening of the manpower base—over the past five years, the industry has grown from employing 430,114 in 2000-01 to two million in 2007-08, thereby lowering the percentage of new hires—and increase in productivity and utilisation levels. Recruitments are now being made closer to deals.
In terms of upcoming trends, while there may be a few specific verticals like mortgage and financial services that are directly impacted, others like healthcare and utilities continue to grow as per projections. The drivers of hiring over the next few quarters will include factors like lack of technically equipped resources in the US, changing demographics of the world, the transformation that is happening at a rapid pace and shortening of time to market, which calls for greater competencies that India possesses.