Beware Techies: Jobs in IT companies will fall by 50%

Bengaluru, Nov 11: In a major setback for lakhs of engineering students, a research report by Crisil claimed that new hirings in Information Technology (IT) sector are likely to drop by 50 per cent over the next four years.

The report might become deadly for aspiring techies across the country as the IT sector is one of the biggest employers in the private sector in India. While Crisil had predicted IT hiring at 1.05 lakh during the fiscal year of 2013-14, it has predicted a mere 55,000 hiring by 2017-18. [Read: Sacked without valid reason: Woman employee gets Rs 12.5 lakh as compensation]

Currently, at least 24 per cent of total private sector jobs are created by IT companies in the organised sector. Economy of the country may see a major impact if the IT sector indeed drops number of hiring by 50 per cent. Here it can be mentioned that more than 7 lakh engineering students graduate every year. [Good news for Infosys: Techies can use Facebook, Twitter at work but condition applies]

Why IT sector may drop new hiring:

According to the report, jobs in the sector is slowing down because margins in the $118 billion outsourcing industry are under pressure. Indian IT giants such as Infosys, Wipro, TCS earn nearly three fourth revenues from North America and Europe. Both America and Europe are under pressure while it comes on growth. Hence, clients are asking companies to cut costs.[Read: Infosys Shocker: Sexual harassment case against senior executive]

In its report, Crisil said that since employee salaries account for the biggest cost component for IT companies, domestic outsourcers are reducing bench strength, improving employee utilisation rates and reducing other operational costs. In 2013-14, employee cost accounted for over 60 per cent of total cost of IT companies, added the report.

According to sources, IT companies have been planning to migrate towards fixed price contracts. It will help the companies to eliminate the need for maintaining a large workforce for billing purposes. Such contracts weigh on hiring as revenue per employee goes up, Crisil notes.

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