Worrying Signs for India's Outsourcing Sector

If job additions are the pulse check for India’s $283-billion outsourcing sector, the June quarter showed worrying signs, with payroll data painting a less-than-ideal picture.

The six leading IT companies added only 3,847 positions during April-June, representing a substantial 72% reduction from 13,935 recruitments in the previous quarter, according to recent financial reports.

AI and Automation Reshaping Hiring Trends

Only TCS and Infosys, the two largest software service providers, increased their workforce by 5060 and 210 personnel respectively between April and June. The other four companies - HCLTech, Wipro, TechM and LTIMindtree - collectively reduced their workforce by 1,423 individuals.

This trend coincides with the outsourcing industry's revenue challenges, where growth typically correlates with employee numbers. Artificial Intelligence-driven efficiencies are enabling IT providers to accomplish technical work with reduced staff numbers.

Strategic Workforce Planning in the Age of AI

“The current stagnancy in headcount additions potentially reflects a strategic recalibration. This shift is driven by the widespread adoption of AI, automation and cloud-based architectures, which have significantly reshaped hiring trends across the IT industry,” Milind Shah, managing director at recruitment firm Randstad Digital India told ET.

The integration of AI-powered automation is transforming operational models, necessitating organisations to focus on digital advancement, staff development and sophisticated recruitment approaches.

The Future of Hiring in IT

Entry-level recruitment, previously the foundation of IT firms' pyramid-model workforce, has decreased by 50% compared to pre-pandemic levels, according to Teamlease data.

Despite announcing strong fresher hiring plans, companies remain cautious with lateral hiring due to uncertain demand, global tariff pressures, and conservative client spending.