The Indian IT services outsourcing industry, a mammoth worth a staggering $245 billion, stands as a shining beacon among the nation’s economic success stories. Serving as India’s largest white-collar recruiter, it has been instrumental in shaping the career trajectories of countless professionals. Traditionally, this industry has been the destination of choice for approximately 20-25 per cent of the annual crop of 1.5 million engineering graduates in India, offering them lucrative opportunities and job security.
Nevertheless, in recent times, the once-blazing halo of this sector appears to be dimming, particularly in the eyes of fresh graduates from second-tier colleges. Historically, the industry giants have been known for their mass hiring sprees, drawing talent from across the country. However, these graduates are starting to view their employment prospects through a different lens. The allure that once made these IT giants the dream employers seems to be waning, as concerns about the evolving nature of work, job stability, and career growth come to the forefront.
This transformation raises questions about the future of the IT services outsourcing industry and its ability to adapt to the changing aspirations and expectations of the new generation of engineers. As India’s technology landscape evolves, both the industry and its potential recruits find themselves at a crossroads, navigating the shifting paradigms of career choices and professional fulfilment.
“We see a decline in the number of students applying for these jobs over the past four years… The charm is fading for IT services companies,” says Vivekanandan M.S., Associate Director and Head of the Directorate of Corporate Relations and Career Services at SRM University (Andhra Pradesh). Hari Om Bansal, Unit Chief of Placements at BITS Pilani, says IT services firms were in vogue 8-10 years ago. “Now, IT product firms have taken over. They pay better, roles are more challenging and offer better exposure through foreign trips and students from premiere institutes prefer them,” he says, referring to firms likes Microsoft, Amazon, Flipkart, Cisco and Oracle.
Colleges attribute the trend to low entry-level salaries that have stagnated at Rs 3.5-4 lakh per annum (LPA) for over a decade, while the IT services industry’s exports have grown multi-fold. To attract youngsters with aspirations, several top IT companies have implemented differential hiring. For example, K.V. Sriram, Associate Director of Industry Liaison, Placement & Practice School at Manipal Institute of Technology, says that after receiving the initial offer, students can qualify for better pay and specialised roles within the same company. “This shows that IT services companies are trying to address students’ aspirations.”
“Apart from regular roles that pay Rs 3.5-4 LPA, the same companies offer a digital profile with a higher compensation of, say, Rs 7 LPA,” says SRM’s Vivekanandan, adding that there is some interest from students for niche roles focusing on machine learning and cybersecurity. “The maximum pay services firms offer is Rs 5-6 LPA, whereas product companies offer a minimum of Rs 14-15 LPA. The difference is stark even compared to the niche roles that offer, say, Rs 10 LPA,” says BITS Pilani’s Bansal, adding that the college is hosting just a few IT services firms and only for their niche roles for which two to three students get picked. Besides, SRM’s Vivekanandan says, product firms also hire in good numbers, referring to a financial product company that recruited 150 students last year from his college for a compensation of Rs 15 LPA.
Anshuman Das, the CEO and Co-Founder of talent solutions firm Careernet emphasizes the pressing need for IT services firms to enhance their manpower demand planning strategies. He underscores the challenges faced by fresh graduates, such as low starting salaries and onboarding delays that have persisted for the past year at least. Das points out that while IT services companies have grown by approximately 2-2.5 times over the last 25 years, the starting salaries for freshers have stagnated at around Rs 3.5 – 4 lakh for at least a decade, failing to keep pace with inflation.
Harshvendra Soin, Global Chief People Officer and Head of Marketing at Tech Mahindra highlights their unique approach to remuneration. Tech Mahindra customizes salaries based on each employee’s skill set and job relevance, ensuring that freshers’ compensation aligns with the skills they demonstrated during the selection process.
Changing student preferences have prompted many Tier II colleges to reduce their reliance on IT services companies. According to Vivekanandan, a representative from SRM, around 150 high-paying product companies now visit the campus in July-August, offering compensation packages ranging from Rs 10-20 LPA. These companies often complete their hiring processes before IT services firms, reflecting the shifting priorities of students and their inclination toward product-oriented roles.
T.V. Mohandas Pai, Chairman of Aarin Capital and former Infosys CFO, sheds light on the evolving dynamics of campus recruitment. He notes that while freshers from Tier III and IV colleges are increasingly joining IT services companies, there is waning interest from Tier II colleges. Tier I colleges, on the other hand, show limited interest, highlighting the industry’s need to adapt its recruitment strategies to attract top-tier talent in this changing landscape.
“We have not discerned declining interest from freshers choosing IT jobs… Given the abundance of pool availability, we are not seeing any major impact on the supply side, but our focus is more on quality talent intake,” says Girish Nandimath, Global Head of Talent Acquisition and academic Interface of TCS
To be sure, students still accept IT services job offers in large numbers. These firms hired 800,000 freshers over the past two financial years, per TeamLease Digital and industry estimates. But many accept them only as a backup until they bag higher-paying product jobs. Others join only to leave in a year or two once their market value rises following training. “The training given by software services companies is world-class. It pays to spend 1-1.5 years with them,” says Pai.
For more news click here!
