IT Sector Faces Hiring Slowdown Amid Global Uncertainties

India's $283-billion IT services industry is experiencing a significant hiring slowdown since the start of the second quarter, with staffing firms anticipating this trend to continue due to global economic uncertainties, higher US tariffs, and weaker discretionary spending.

Sharp Decline in Overall Hiring Numbers

Data from Teamlease reveals a 10% drop in overall hiring across India's outsourcing sector between July and August. The June quarter had previously recorded a 3% year-on-year increase in headcount, with net additions of approximately 9,000 employees.

Legacy Tech Jobs Hit Record Low

Xpheno's data shows active openings for legacy tech jobs fell to 43,000 at the end of August, representing a 9% decline from July and a 24% year-on-year decrease. This marks a concerning 41% fall from September 2022 levels.

Emerging Technologies Defy the Trend

While legacy tech hiring struggles, demand for roles in artificial intelligence (AI), machine learning (ML), cloud computing, data analytics, and cybersecurity remains strong. Teamlease Digital CEO Neeti Sharma notes: "Companies are hiring in higher numbers for skills in cloud, data, cybersecurity and AI/ML coding, while legacy tech stacks are not being hired for."

Critical Talent Shortage in High-Demand Fields

India faces a severe shortage of qualified professionals in emerging technologies. The country requires more than 500,000 AI-skilled professionals but currently has only one qualified engineer for every 10 open roles, driving salaries significantly higher, particularly in GenAI and cybersecurity.

Outlook Remains Cautious

Industry experts expect the September quarter to close weaker than anticipated, with the October-December period likely to remain muted due to festive breaks in India and holidays in the US and Europe. Kapil Joshi of Quess Corp attributes the nearly 20% August demand drop to "macro factors, including additional US tariffs and global economic uncertainties."