New recruitments in the Indian IT sector will nearly halve over the next three years, said ratings agency Crisil.
The information technology (IT) sector is likely to lose its position as a mass employment engine though companies will continue to report good revenue growth.
The report said despite revenue growth of 13 percent for IT services foreseen in the medium-term, aided by recovery in discretionary spending by clients, recruitments will shrink by around halve by fiscal 2018 from the current levels with vendors focusing on cost optimization by maximizing revenue-per-employee.
Crisil said this will be bad news for technology graduates, who are getting hired in large numbers from their campuses during the past few years.
Hiring and revenue growth will decouple as IT companies alter their business models… the sector, which is a mass employment engine now, is unlikely to remain so in future, said a PTI report.
The ongoing global weakness is forcing clients to trim their spends, which has in-turn forced IT companies to find ways to rationalize costs and ensure profitability.
Software companies are implementing measures such as reducing bench strength, improving employee utilization rates and reducing other operational costs.
Despite the predicted revenue growth, companies will run very tight ships because of which incremental employment will be curbed.
There will be a greater focus on lateral hires of professionals with domain-specific skill sets and expertise.
Crisil said the IT sector, with revenues of $118 billion, currently employs 3.1 million people and accounted for a fourth of the total organized sector employment generation in FY14.
Between FY02 and FY14, revenues grew at a compounded annual growth rate of 18 percent while the employee-base grew by 15 percent, it said, spelling out three phases of the employment growth.
The new phase, it reiterated, is one of de-linking revenue and hiring growth.
Aspirants for IT jobs will have to develop lateral, even completely new skill sets to make themselves more future-ready, it added.