The global IT services industry is undergoing significant changes in the wake of the COVID-19 pandemic. While the FAANG companies (Facebook, Apple, Amazon, Netflix, and Google) are known to have initiated major workforce reductions due to the economic slowdown, the IT services sector in India continues to shine as a beacon of opportunity for fresh graduates. Yet, an enduring concern remains the modest starting salaries for newcomers in the field.
Thank you for reading this post, don't forget to subscribe!Recent reports post the third-quarter earnings indicate a notable headcount decline for consecutive quarters in top IT firms like TCS and Infosys. In a candid conversation with CNBC-TV18, TCS’ chief human resources officer, Milind Lakkad, elucidated why fresher salaries have plateaued at around ₹3-4 lakh per annum for nearly a decade.
According to Lakkad, TCS’s compensation is talent-based, encouraging individuals to join at various levels. He added that freshers and current employees who invest in upskilling can potentially double their earnings, with salaries reaching as high as ₹10 lakh per annum for specific skill sets. The company also pays considerably more for recruits from premier institutes like NITs and IITs.
Despite these possibilities, the starting salaries for freshers have remained static for several years. Lakkad believes that the real opportunity lies in the path they choose post-joining, which can lead to a significant salary increase.
Addressing the reduced headcount, Lakkad pointed out the long-term strategy of hiring in large numbers during FY22 and FY23 and leveraging this workforce over the past three quarters.
Recent Trends and Future Outlook
The IT industry, particularly post-COVID, has witnessed dramatic shifts. Companies faced challenges in retaining skilled professionals amidst the Great Resignation, marked by high attrition rates and wage inflation. This led to a strategic shift from external hiring to building and developing internal talent, a more sustainable approach in the current volatile market.
Global Tech Layoffs
2023 and 2024 have seen a significant number of layoffs in the tech sector globally, with companies like Alphabet (Google’s parent company), SecureWorks, Rapid7, and Cisco Systems among those reducing their workforce. These layoffs reflect a broader trend towards optimizing operations and focusing on core competencies in the face of economic uncertainties.
IT Sector Growth in India
According to a report by domestic rating agency Icra, the revenue growth for Indian IT companies is expected to slow down to mid-single digits in FY24 amid intensifying macroeconomic headwinds. The report highlights that despite strong order books and deal pipelines, the sector’s growth has decelerated, impacting hiring trends. The top five companies in the sector added significantly fewer employees in FY23 compared to FY22.
The IT services sector, especially in India, continues to offer promising opportunities for freshers, notwithstanding the global economic downturn and shifts in hiring practices. While the starting salaries remain a point of contention, the potential for growth through upskilling and internal career progression presents a silver lining. As the industry navigates through these challenging times, its resilience and adaptability will be key to sustaining growth and attracting new talent.
