 "Upper hand for IT firms in engg hires")
A drop in attrition, a rise in the joining rate of freshers and a significant jump in the supply of engineering students, has increased the bargaining power of information technology companies, with real wages for entry-level employees at its lowest in 15 years.
Mid-size companies such as Tech Mahindra and Hexaware have been able to postpone pay rises without a significant increase in attrition. Tata Consultancy Services’ official forecast (‘guidance’) of entry-level hires is the same as in 2008-09, despite twice the overall employee base and a vastly different outlook (more positive) on the demand environment. Joining salaries offered at many engineering institutes have remained in the range of Rs 3.1-3.5 lakh per annum for some years.
“There has been a significant improvement in supply of engineering talent. Engineering college capacity has seen a 20-plus per cent compounded annual growth rate over several years. While the quality of some of this increased capacity might be varied, the bargaining power of companies has increased,” said Anantha Narayan and Sagar Rastogi of Credit Suisse in a recent report.
The company visits around 350 colleges to hire from across India. For FY15, it has said it would hire 25,000 freshers. “Our hiring target for FY15 is the same as FY14. Even then, we will be visiting all the campuses in our list. The colleges where we are not able to go, we will look for off-campus recruitment, generally in January-February,” said Mukherjee.
Narayan and Rastogi say changes in the business model are helping IT companies to strengthen their position. “Higher automation and the use of tools can mean that non-engineering graduates can be used for certain service lines. The focus on non-linear avenues of growth by companies can help to some extent,” they said. In non-linear avenues, revenue can grow much faster than headcount.
Further, with the process of software development becoming less complex in certain areas due to the re-usability of code, and the development of tools and platforms, a number of positions can be filled with non-engineering graduates.
Besides, Indian companies have also stepped up hiring from abroad. With IT companies entering new areas of services, where local talent and expertise become important, and with potential immigration issues and the difficulty in getting visas, companies have expanded hiring onsite. It eases the pressure on wages domestically.
Added to this is the Indian economy’s slowing and the competition for engineering talent from other sectors reducing.
Also, industry sources said total campus hiring will be tepid for 2014. “Companies are going to campuses but the total number of hires will be less. Also, as productivity per employee has been going up, many companies are also focusing on non-linear growth, which will impact hiring,” said the personnel head of a large IT services company.
Industry body Nasscom has already hinted that hiring for FY15 will be slow and companies might opt more for just-in-time hiring. According to Nasscom, attrition declined between FY 2011 and 2013, from 19 per cent to around 14 per cent, in the IT, engineering and R&D services and knowledge process outsourcing sectors. In BPM (voice) companies, the attrition levels have come down from 43 per cent to 33 per cent.
Given this scenario, engineering graduates would either have to explore other sectors for employment or opt for higher studies, say engineering institutes.
While this may be good for the IT companies, engineering colleges from where these institutes recruit in bulk are not very positive about the salary packages being doled out to their students.
* India’s 1.5 million engineers graduating every year dwarfs both China’s and US’ put together
* India trains more engineers annually (1.5 million) than China (1.1 million) and the US (0.1 million) combined
* This might lead to meaningful underemployment and/or stagnating wages; stoking frustration among the overqualified
* The intake of engineering students has gone up to 1.5 million in FY12 from 0.7 million in FY08
* India requires a million graduates a year, compared to 2.4 million trained every year
Mid-size companies such as Tech Mahindra and Hexaware have been able to postpone pay rises without a significant increase in attrition. Tata Consultancy Services’ official forecast (‘guidance’) of entry-level hires is the same as in 2008-09, despite twice the overall employee base and a vastly different outlook (more positive) on the demand environment. Joining salaries offered at many engineering institutes have remained in the range of Rs 3.1-3.5 lakh per annum for some years.
“There has been a significant improvement in supply of engineering talent. Engineering college capacity has seen a 20-plus per cent compounded annual growth rate over several years. While the quality of some of this increased capacity might be varied, the bargaining power of companies has increased,” said Anantha Narayan and Sagar Rastogi of Credit Suisse in a recent report.
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At TCS, the joining ratio rose to 73-74 per cent last year against 69-70 per cent earlier. Ajoy Mukherjee, its executive vice-president and global head, human resources, said the company expects joining ratios to go up this year, too.
The company visits around 350 colleges to hire from across India. For FY15, it has said it would hire 25,000 freshers. “Our hiring target for FY15 is the same as FY14. Even then, we will be visiting all the campuses in our list. The colleges where we are not able to go, we will look for off-campus recruitment, generally in January-February,” said Mukherjee.
Narayan and Rastogi say changes in the business model are helping IT companies to strengthen their position. “Higher automation and the use of tools can mean that non-engineering graduates can be used for certain service lines. The focus on non-linear avenues of growth by companies can help to some extent,” they said. In non-linear avenues, revenue can grow much faster than headcount.
Further, with the process of software development becoming less complex in certain areas due to the re-usability of code, and the development of tools and platforms, a number of positions can be filled with non-engineering graduates.
Besides, Indian companies have also stepped up hiring from abroad. With IT companies entering new areas of services, where local talent and expertise become important, and with potential immigration issues and the difficulty in getting visas, companies have expanded hiring onsite. It eases the pressure on wages domestically.
Added to this is the Indian economy’s slowing and the competition for engineering talent from other sectors reducing.
Also, industry sources said total campus hiring will be tepid for 2014. “Companies are going to campuses but the total number of hires will be less. Also, as productivity per employee has been going up, many companies are also focusing on non-linear growth, which will impact hiring,” said the personnel head of a large IT services company.
Industry body Nasscom has already hinted that hiring for FY15 will be slow and companies might opt more for just-in-time hiring. According to Nasscom, attrition declined between FY 2011 and 2013, from 19 per cent to around 14 per cent, in the IT, engineering and R&D services and knowledge process outsourcing sectors. In BPM (voice) companies, the attrition levels have come down from 43 per cent to 33 per cent.
Given this scenario, engineering graduates would either have to explore other sectors for employment or opt for higher studies, say engineering institutes.
While this may be good for the IT companies, engineering colleges from where these institutes recruit in bulk are not very positive about the salary packages being doled out to their students.
* India’s 1.5 million engineers graduating every year dwarfs both China’s and US’ put together
* India trains more engineers annually (1.5 million) than China (1.1 million) and the US (0.1 million) combined
* This might lead to meaningful underemployment and/or stagnating wages; stoking frustration among the overqualified
* The intake of engineering students has gone up to 1.5 million in FY12 from 0.7 million in FY08
* India requires a million graduates a year, compared to 2.4 million trained every year