India’s IT Services Industry: A Hiring Slowdown Amidst Shifting Trends
Current Landscape of IT Hiring
India’s IT services sector, a significant pillar of the economy, is experiencing a notable slowdown in hiring as we move through the latter half of the year. Since the beginning of the second quarter, staffing firms have reported a continuous decline, attributed largely to global economic uncertainties. Factors such as heightened US tariffs and a shift in discretionary spending are impacting hiring trends across this crucial industry.
Recent data from Teamlease indicates an overall 10% drop in hiring within India’s $283 billion outsourcing industry between July and August. This shift marks a considerable deviation from previous growth patterns, highlighting the sector’s vulnerability to external pressures.
Legacy Technology Jobs on the Decline
One of the most striking aspects of this slowdown is the significant decline in demand for legacy technology roles. As of the current quarter ending September 30, there has been a 2-3% decrease in hiring for these positions. This is a stark contrast to the June quarter, which had recorded a 3% year-on-year increase, with approximately 9,000 new employees added to the workforce.
Within the top six IT firms—such as Tata Consultancy Services (TCS) and Infosys—job additions have fallen drastically. Recent reports reveal that these companies collectively added just over 3,800 positions during the June quarter, a staggering 72% drop compared to the previous quarter.
Active Openings: Shifting Focus to Emerging Technologies
The data from Xpheno paints a similarly concerning picture, showing that active openings for legacy tech jobs plummeted to 43,000 at the end of August. This represents a 9% decline from July and a striking 24% decrease year-on-year, amounting to a 41% drop since September 2022. As articulated by Xpheno cofounder Kamal Karanth, “The demand volume is fast approaching its lowest point in three years, and there aren’t any immediate or clear signs of a turnaround.”
However, not all segments of the job market are facing this downturn. The demand for roles in artificial intelligence (AI), machine learning (ML), cloud computing, data analysis, and cybersecurity remains robust. Teamlease’s insights highlight a vibrant job market in these areas, suggesting a significant shift in the skills required by employers.
Response from Industry Leaders
Industry professionals are taking note of these changes. Neeti Sharma, CEO of Teamlease Digital, emphasized the divergent trends in hiring: “Companies are hiring in higher numbers for skills in cloud, data, cybersecurity and AI/ML coding, while the legacy tech stacks are not being hired for.” This clear divide illustrates how technological advancement is reshaping workforce requirements.
Kapil Joshi, CEO of IT staffing at Quess Corp, also reported a sharp drop—in August alone, there was nearly a 20% reduction in demand compared to July. Joshi attributes this downturn to "macro factors," including increased US tariffs and ongoing global economic uncertainties that have made employers more cautious about hiring.
Future Projections
Looking ahead, the September quarter is expected to conclude on a weaker note than initially anticipated. Furthermore, the upcoming October–December period could see muted hiring activity due to the festive breaks in India and holidays in the US and Europe. These seasonal variances often compel companies to adjust their hiring strategies.
Yet, the surge in demand for emerging tech roles paints an optimistic future in certain sectors. Teamlease’s analysis indicates that India requires more than 500,000 AI-skilled professionals but currently only has one qualified engineer for every ten open roles. This imbalance is driving salaries higher in high-demand fields such as GenAI and cybersecurity.
Conclusion
While the current hiring landscape may appear challenging for legacy technology roles, the robust growth in emerging technology sectors presents a pathway for the industry’s evolution. As the IT landscape continues to morph under the influence of global economic pressures and technological progression, adapting to these changes will be crucial for both employers and job seekers. Whether this shift will yield a balanced and sustainable job market remains to be seen, but the focus on AI and cybersecurity could very well define the industry’s trajectory in the years to come.