Indian IT Sector Witnesses Job Losses as Hiring for Flexi Workers Declines


The information technology (IT) sector in India has experienced a significant decrease in job opportunities for outsourced contract workers, with nearly 60,000 individuals losing their jobs in the year ending in March. According to the Indian Staffing Federation, a body representing recruitment agencies across the country, employment generation in the IT flexi staffing sector dropped by 7.7% compared to the previous year, reflecting the global slowdown in IT hiring. While the IT sector faced challenges, other industries such as manufacturing, logistics, and retail continued to exhibit strong hiring trends, thanks to robust domestic consumer demand. The IT industry, valued at $194 billion, played a crucial role during the pandemic by enabling businesses to adopt online shopping and remote working practices. However, as employees gradually return to offices and geopolitical tensions, such as the Russia-Ukraine conflict, impact spending from European clients, the sector is facing a slowdown.

J.P. Morgan analysts recently warned of a growth downturn for India’s IT services due to factors like soaring inflation, supply chain disruptions, and the fallout from the Ukraine war. In line with these concerns, the IT sector witnessed a 6% decline in quarter-on-quarter hiring of flexi workers during the March quarter. Lohit Bhatia, the president of the Indian Staffing Federation, expects the hiring of contract workers through third-party vendors to remain weak in the software industry for the next few quarters. Overall, the demand for flexi workers slowed down across various sectors. In the financial year 2022/23, only 177,000 jobs were added through vendors, compared to 230,000 jobs in the previous year. However, it is worth noting that the number of flexi workers employed by Indian companies has increased to 1.4 million, with women accounting for one-fourth of this workforce.

As the country grapples with the impact of the pandemic and geopolitical challenges, India’s unemployment rate continues to rise. In April, the unemployment rate reached 8.11%, marking the fourth consecutive month of increase, according to the Centre for Monitoring Indian Economy (CMIE). In summary, the Indian IT sector is witnessing job losses as the hiring of flexi workers declines. The global slowdown in IT hiring, coupled with the return of employees to offices and geopolitical tensions, has contributed to the industry’s slowdown. While other sectors like manufacturing, logistics, and retail remain resilient, the overall demand for flexi workers has slowed down. The repercussions of these trends are reflected in the rising unemployment rate in India.


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