Why fresher hiring is going down in Indian IT

BENGALURU | NEW DELHI: Age is catching up with India’s information technology industry and its top companies.

The showpiece sector, which for the better part of the past three decades boasted the youngest workforce brimming with baby-faced engineers, is now showing strands of grey hair as technology and business models of companies undergo rapid transformation.

Over the past five years, slower growth rates have forced India’s top software firms to clamp down on hiring fresh engineering graduates and focus more on lateral hires of more experienced executives to fill up important roles that require specific new-age, niche skills for technologies such as cloud computing and analytics. The $146-billion (Rs 9.3 lakh crore) IT industry employs some 3 million professionals.

At India’s top five outsourcing firms, the average age of employees is nearly 30, compared to the decade of the 2000s when the average age was around 25. At India’s second-largest software company Infosys, for instance, the average age of employees has gone up from about 26 to 29 over the past five years.

“The average age has steadily gone up — it is around 29 right now,” said Binod Hampapur Rangadore, executive vice president and global head of talent and technology operations at Infosys. “Five to ten years ago, the average age was 26-27. Over the last 3-4 years, the average age has steadily gone up.”

At HCL Technologies, the average age of employees has gone up from 28 to around 31 years over the past five years, according to the company’s global HR head Prithvi Shergill. At India’s third-largest software exporter Wipro too, the number has inched up consistently.

According to Wipro’s latest annual report, 61.5% of the company’s total workforce is under the age of 30, compared with 66% for the financial year ended March 2011. Average age at the company currently stands at 30.3 years, compared to 29 for the fiscal ended March 2011. TCS did not immediately respond to an email seeking comment.

“Work is becoming more complex. The amount of time that people see their careers for is reflective of the growth rates of the industry as well,” said Shergill, chief human resources officer at HCL Technologies.

“So people tend to understand the value of staying in the organisation longer, so the average age also increases.” Nasscom estimates that software exports will grow by 12-14% in FY2016. A decade ago it was growing more than twice as fast.

Through the better part of the 2000s, companies like Infosys built up magnificent, plush American-styled campuses to house tens of thousands of fresh engineering recruits who were deployed on back-office projects of large customers such as General Electric and Citigroup to bring down the cost of software development and maintenance.

However, with growth rates slowing down and top outsourcing customers asking for fewer staff on each project, companies like Infosys and TCS have been forced to chase non-linear growth and cut back on hiring of recent graduates. This has also resulted in a huge imbalance in terms of demand and supply.

India currently produces more engineering graduates annually than the US and China combined. According to AICTE and Nasscom figures, the annual intake of engineering colleges across the country has gone up by at least two to three times over the past six years. India now produces at least 1.5 million engineering graduates annually –more than the 1.2 million produced by US and China combined annually.

Compared to that, India’s IT industry currently hires about 150,000 employees annually. According to a top Nasscom executive, who requested anonymity, the average age of employees across the top 100 IT companies surveyed over the past 12 months has also gone up during the same period from 27 years to around 28 years.

The increase in average age also points to another significant shift — the number of freshers joining startups has also increased over the past five years.

“The balance has also shifted because larger number of young engineering graduates are preferring to join startups as opposed to large IT services firms,” said the Nasscom executive mentioned above. “Also, with bigger companies now pushing for non-linear growth and looking for more experienced people, the number has to go up. And slower growth rates have also forced them to cut back on hiring freshers.”

Part of it is linked also to the fact that attrition rates of 19-20% have become the new normal at India’s top five software services firms. “When the attrition is high, you have to backfill it from outside. So that’s when the average age goes up,” Rangadore said.

Source: PTI

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