With more big tech firms such as Microsoft, Google, and Amazon hopping on the layoff bandwagon each week, almost 60,000 people have lost their jobs since the start of this year. This has been accompanied by muted hiring sentiments in both the IT and start-up sectors.

This layoff period, coupled with a lull in hiring, is expected to last over the next two or three quarters, say experts. However, hiring in key areas such as big data analytics, data science, AI/ML, DevOps, cloud computing, and cybersecurity is expected to keep pace.

“The IT sector and the start-up ecosystem have been witnessing a slowdown in hiring for the last 6 months due to geopolitical scenarios and the looming recession, resulting in cost-conservation measures by corporates,” said Sachin Alug, CEO of talent solutions firm NLB Services.

The pandemic spurred companies, both global and domestic, to bolster investments in services ranging from cloud computing and digital payment infrastructure to cybersecurity. As a result, firms reaped rich dividends as the world underwent a digital transformation at a frantic pace.

According to a NASSCOM report released at the start of 2022, Indian IT companies were recording a growth rate of around 15-20 per cent at the time, compared to 6-7 per cent before the pandemic.

This led to a lot of over-hiring in the sector, which led to supply constraints that resulted in a situation where salary offers were way above the market offering at the time.

“Over the last year and a half, there has been a significant surge in tech hiring across organizations of every size. This was fuelled by increased global demand, new incubation projects, and upgradation of legacy software,” said Vijay Sivaram, CEO, Quess IT Staffing.

“However, because of costs incurred due to over-hiring last year, businesses have now shifted focus towards profitability and maintaining gross margins. Large investment and incubation projects are now also being disbanded,” he added.

Globally, around 965 tech companies laid off more than 150,000 employees in 2022. While in India, more than 17,000 people reportedly lost their jobs.

The Indian IT sector is already seeing the impact of over hiring and the delay in deal closure on hiring. The four IT companies —Tata Consultancy Services, Infosys, HCL Technologies, and Wipro — together added only 1,940 employees in Q3FY23, the fewest in the past five years, barring the pandemic hit Q4FY20 and Q1FY21 when these companies had reported a decline in their headcount on a net basis.

These four IT companies together added nearly 80,000 employees in Q4FY22 and nearly 47,000 employees on average in the previous nine quarters.

The start-up ecosystem, too, saw layoffs. According to data from staffing firm TeamLease, 44 start-ups, including unicorns, sacked 15,216 people amid the funding winter, Business Standard had reported earlier. The axe fell the hardest on the edtech sector, where 6,898 employees were handed pink slips, followed by consumer services and e-commerce.

In 2023, the layoff tally in these two sectors has already reached almost 40 per cent of what it was the previous year. To date, 179 companies have let go 57,550 employees, according to data from Layoffs.fyi, a layoff tracking platform.

Staffing firms say that employees have felt the impact of layoffs across levels, and especially in entry and mid-level positions.

“We have seen increasing pressure of layoffs across the world lately and a portion of the Indian workforce has felt the impact. Few categories such as contract staffing, especially in IT, saw a significant dip,” said NLB’s Alug.

This lull in hiring is expected to persist till the next one or two quarters while the layoff period should end by the first quarter of the next financial year, Ajoy Thomas, VP and Business Head at TeamLease Services, told Business Standard.

Although if the fears of an impending recession intensify, the number of layoffs may go higher than what has been witnessed previously.

According to estimates, despite the mounting layoffs in the start-up ecosystem, the sector currently has around 14,000-16,000 job openings. However, experts believe that most of these vacancies are in the form of gig contracts.

“The overall market sentiment around hiring is low at the moment. The hiring of permanent employees has seen a decline. Demand for gig work, on the other hand, has seen an uptick. On-demand contractual work seems to be the preferred hiring mode for start-ups right now,” Thomas said.

Despite this, the circumstances aren’t as dire as they appear. There are skill and expertise domains that are unfazed by the layoffs, where hiring has maintained its momentum.

Hiring for tech roles across telecom, banking and financial services and insurance (BFSI), and healthcare are expected to stay afloat in the tide of layoffs and hiring halts. Sectors such as manufacturing will see an uptick as well going into 2023.

“Hiring will continue in areas like big data analytics, data science, AI/ML, DevOps, cloud computing, and cybersecurity, especially in companies adopting new tech like 5G in business,” said Alug, adding that “The hiring of entry-level candidates has been a go-to choice for both start-ups and IT majors last year and we expect anywhere between 15,000 and 50,000 new hires through campus placements by IT giants in 2023.”

“At the same time, we are seeing a lot of Indian enterprises continue to add capacity in the IT sector. We have seen a lot of demand coming through the Indian enterprises such as large banks, telecom firms, and consumer firms,” added Quess’ Sivaram. “Hiring sentiment has come down from last year but it has normalized to levels similar to the pre-pandemic era.”

“We will not see a surge like last year. We are more likely to see a pre-covid level of stabilized hiring which will bring a lot more stability to the ecosystem,” he added.

• 
  Globally, around 965 tech companies laid off more than 150,000 employees in 2022.
• 
  As many as 44 start-ups, including unicorns, sacked 15,216 people amid the funding winter in India in 2022.
• 
  In 2023, the layoff tally in these two sectors has already reached almost 40 per cent of what it was the previous year. To date, 179 companies have let go of 57,550 employees.
• 
  Despite the mounting layoffs in the start-up ecosystem, the sector currently has around 14,000-16,000 job openings.
• 
  Hiring for tech roles across telecom, banking and financial services and insurance (BFSI), and healthcare are expected to stay afloat in 2023.
• 
  Hiring in key areas such as big data analytics, data science, AI/ML, DevOps, cloud computing, and cybersecurity is also expected to keep pace.