Navigating the Challenging Job Market, Freshers in India’s IT Industry Feeling the Heat as Hiring Slows Down; The Trend Likely To Continue FY24?

Freshers are feeling the heat as the IT industry slows down hiring. Many of them have invested a lot of time and money into obtaining the necessary education and training to enter the industry, only to find that there are limited job opportunities available.

This is in stark contrast to the good fortune that the IT sector has witnessed in the last few years, and so has the good luck been shining on IT techies and graduates with the lure of exemplary working conditions (Tech Parks), excellent salaries and perks, to travel, today things have changed drastically for this sector and those working in it, especially for freshers. 

Until 2021, the sun shined bright, and Indian IT companies went into overdrive to recruit as pandemic fuelled demand surged given rapid digital adoption; this also presented many opportunities for those looking for greener pastures; hence, the rising attrition rate led to a hiring spree and ways to retain talent.

However, things have changed today, and one is seeing just the opposite side of the spectrum – IT freshers are being kicked out, stalled hiring, and even job cuts, all in the hopes of protecting their bottom lines amid plateauing demand.

No Takers For IT Freshers

The current job market for freshers in the IT sector is highly competitive, with many experienced professionals also seeking employment. This has made it even more challenging for freshers to secure a job.

The slowdown in hiring has also had an impact on the salaries and benefits offered to freshers. Many companies have reduced the salaries offered to freshers and have cut back on other benefits such as training and development opportunities.

Let us try and put into perspective what the Indian IT companies have done so far in order to cope with the slowdown in demand and cut costs – 

Wipro – The Glorious Days

In October 2021, Wipro’s Chief Human Resources Officer, Saurabh Govil, emphasized the need for long-term changes to bridge the supply-demand gap in the IT industry. He stated that hiring and retaining freshers was a critical component of this strategy, with plans to increase the number of college graduates hired and establish processes for retention.

The Changed Perspective

However, recent news reports suggest that retaining freshers may no longer be a top priority for Wipro. Despite Govil’s earlier statements, the company has reportedly shifted its focus towards cost-cutting measures in response to the economic slowdown, leading to a reduction in hiring and training programs for freshers.

This change in approach has raised concerns about the long-term impact on Wipro’s ability to address the supply-demand gap in the IT industry. Retaining freshers and fostering a positive company culture can have a significant impact on the supply side, as Govil had previously noted. However, without sustained investment in these efforts, the company may struggle to attract and retain top talent in the future.

Earlier this year, Wipro faced criticism for its treatment of freshers, which included asking those who were offered an annual salary of INR6.5 lakh to join immediately at INR3.5 lakh, with the company citing an inability to commit to a joining date if the reduced offer was not accepted. 

The company also reportedly terminated 400 freshers in January who had passed initial tests and received offers for failing to clear internal exams. In the termination letter, Wipro waived off the cost of training worth INR75,000 for those asked to leave.

Some considered these actions to be unethical, and the Nascent Information Technology Employees Senate (NITES), an IT employees’ union, filed a complaint against Wipro with state labour commissioners.

More recently, in April, Wipro reportedly asked freshers who accepted the revised offer to pass a series of assessments before joining, failing which they may face termination. This has raised concerns about the company’s treatment of freshers and its commitment to developing and retaining top talent.

Not Just Wipro But Other IT Companies Too

However, this is not the case only with Wipro; other IT companies are also doing what they need to do in order to cope with the current market trend – In April, LTIMindtree asked freshers to pass a series of tests or risk having their job offers cancelled.

Whereas other IT services companies are either delaying onboarding or excluding freshers from the first annual appraisal cycle, leading to delayed salary hikes.

Hence, the current situation highlights the challenges facing freshers in the IT industry, who are finding it increasingly difficult to secure stable job opportunities. 

Definitely, a disappointing scenario for freshers, but with little letup to be expected in the months going forward, employment and competitive salaries in a tightening job market are here to stay!

Why No Takers For Freshers?

The average starting salaries for freshers have more or less remained in the same bracket for almost a decade – 3- 6 L per annum; typically, they are hired when they are in their final semester, and once the exams are done, they are given their joining dates. 

They undergo training for six months; however, it takes about three-four years for a fresher to be considered “skilled”. At this point, they are already on the lookout for more lucrative jobs. The highest attrition rate is among IT professionals with three to six years of experience.

IT companies often complain that since they incur the cost of training freshers and face attrition once they become productive, there is no incentive to raise starting salaries. Further, there is a massive oversupply of engineers, with one million students graduating every year. During the peak of hiring in FY22, IT companies recruited around 360,000 freshers. But still, more than 600,000 engineers needed to find employment outside the IT services sector, the largest employer of talent.

At the same time, freshers have little incentive to be loyal. Their starting salaries are low, and changing jobs can dramatically improve their earnings.

On their part, IT companies have tried to address this issue. For instance, in 2021, Wipro’s Govil talked about putting in place a plan to retain freshers. “We are having a communication plan that I think is unique, where we not only share with them what happens [to their] compensation when they join but also a plan for them in terms of their career and compensation over the next five years. And that’s built in their contract. So, it’s very clearly driving a plan that we increase the retention of these people,” he had said.

The IT major has lowered its FY24 margin guidance to 20%-22% from 21%-22%, partially based on how quickly freshers can be deployed in a slow-growth environment. The company, however, declined to give a forecast for how many offers it would make to freshers in the current financial year.

So what Next For Freshers, What Can They Do?

The job market can be challenging for freshers, especially in the current scenario. However, they can explore opportunities available in non-tech sectors and upskilling themselves in high-demand tech skills can help mitigate the risk.

It is also essential to highlight that certain companies in the IT sector are still hiring and looking for candidates with strong technical skills, excellent communication skills, and the ability to work well in a team. 

Therefore, freshers must focus on building these skills and gaining relevant experience through internships, freelance work, or volunteering.

Additionally, networking can play a vital role in finding job opportunities, and freshers can connect with industry professionals through social media platforms such as LinkedIn or attending job fairs and networking events.

Freshers can also consider looking for opportunities in emerging technologies such as AI, machine learning, and cybersecurity, where there is a growing demand for skilled professionals.

In conclusion, while the current job market for freshers in the IT industry in India is challenging, it is not impossible to find employment. 

Freshers should focus on building their technical skills, networking with professionals in the industry, and exploring opportunities in emerging technologies to increase their chances of securing a job. 

Freshers can increase their chances of finding employment by being proactive, building relevant skills, networking, and exploring opportunities outside of the traditional tech sector.