Global Meltdown and India’s IT Woes
On the one hand software exporters are cutting down onsite strength and on the other premium salaries commanded by professionals with high-end IT skills is waning
Make no mistake! The global economic slump has already caused some trouble for the Indian IT majors as well as top professionals with cutting edge tech skills. While on the one hand Indian software exporters are reducing their onsite strength in the US, the mid-tier software or IT professionals are witnessing a drop in their salary negotiation bandwidth.
Software exports are reportedly facing a reduction in online strength due to higher attrition and visa restrictions, resulting in both revenues and margins getting under pressure. The problem is being felt across the IT sector, according to staffing firm TeamLease. A report published in the ET quotes an TeamLease official to suggest attrition rate had surged to 25% in 2022.
Mid-level IT professionals face the heat
Meanwhile, there is trouble on the home front as well premium commanded by the workforce with top-end tech skills are witnessing a drop in their negotiation bandwidth. The report quoted executive search firms to suggest that the salary range offered by companies has dropped back to the pre-Covid levels.
They claim that enterprises that were offering massive hikes to rope in talent post-pandemic, have reduced their negotiation range for job seekers claiming skills such as full-stack developers, data engineers and data analysts, front-end and backend engineers etc. From the levels of 50-120% hikes, to between 15 and 40%.
Global cues, oversupply are key causes
While the drops have been significant in IT services due to global economic uncertainty, experts also believe that a talent oversupply has also caused a reduction in the negotiating bandwidth. Those seeking higher salary revisions and negotiating with counter-offers be warned that companies aren’t taking kindly to this now.
As for the higher rate of onsite attrition, it has put a strain on company profits as such instances force them to opt for subcontracting that eventually spikes up the costs. It appears as though Cognizant is among the worst affected by this scenario as subcontracting costs depend on visa delays and the skill levels available.
The company had told reporters during an earnings call in November that fewer billable resources in the United States over recent quarters had hurt revenues. CEO Brian Humphries said such an impact could continue through October-December 2022 with things slated to improve from the first quarter of 2023.
IT companies have been facing onsite attrition despite increased local hirings and moving a larger chunk of work offshore since the pandemic. TCS usually hires between 2,000 to 2,500 trainees each year in the US, whereas Cognizant said it had managed to reduce attrition to 29% by end-September, which is worse than most of its peers.
