Explained: Why are IT firms in India facing shortage of contract staffers?

India’s information technology is facing a nearly 20 per cent dip in the demand for contractual staffers. The companies are now focussing on retaining their permanent workforce, Hindustan Times’ business website Livemint reported.

AR Ramesh, the director of digital business solutions and professional staffing at Adecco, a temporary staffing firm, told the website that the main reason behind the contract workers staff decline is the macroeconomic conditions and the IT giants now preferring to retain their permanent staffers.

According to the company, at present there are about 10-12 per cent of contract staffers in the information technology and IT-enabled services sector with less than eight years of work experience.

The decline in contract staffing comes in wake of the crisis in the sector where the IT companies had embarked on a hiring spree after two years of Covid-induced lull. The IT companies were offering 60-70 per cent hikes and counter offers as several business needed techies to digitise their systems, the Livemint report added.

But what happened was that several employees were hired and not deployed for services. Due to slowdown in US-based clients, the tech firms have now resorted to cutting their hiring targets for the next financial year. Also, several IT companies have delayed the onboarding of thousands of students who were hired during campus placements by more than six months.

Rituparna Chakraborty, the co-founder and executive director of TeamLease Services, said the tech firms have begun to realise the need to balance the long term with short term in attracting and retaining talent.

The recruitment firms which are heavily dependent on contract staff will suffer a setback on revenues if the current trend continues

Recruitment firms like HanDigital which heavily dependent on contract staffing will take a hit on their revenues if the trend continues. The tech recruitment firm’s founder Saran Balasundaram told Livemint that 40 per cent of his company’s revenue depends on contract staffing and there has been a 30 per cent decline in the demand in the July-September quarter. He fears the revenue from contract staffing in IT will suffer a 12-15 per cent dip by the end of this financial year.

CIEL HR Services, a recruitment firm, has witnessed a 10-20 per cent drop in hiring mandates in July-September quarter this year. Aditya Narayan Mishra, the director and chief executive officer of the company, said the organisation has been trying to knock on more doors to generate business.

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