IT sector slowdown’s impact being seen in overall white-collar job market

IT sector slowdown’s impact being seen in overall white-collar job market

An extended slowdown in the Indian IT services sector — the largest employer in the country’s white-collar job market — is having a cascading effect on the rest of the tech cohort of software product and startups as well as the overall white-collar job market, according to job market experts.

The number of open positions in the IT services sector stood at 50,000 at the end of January, down 21% from a year ago and over 60% from two years ago, according to data from LinkedIn and other top job boards put together by specialist staffing firm Xpheno.

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About 80% of the data sample represents entry-level hiring (0-2 years experience), indicating that the slump is mainly on account of a near freeze at the bottom of the pyramid for IT companies.

The drop in hiring comes despite an 8-9% decline in attrition at the tech services companies, reflecting the fact that not only are new jobs not created but companies are cautious about replacement hiring too, said experts.

“The 67% drop in IT sector’s collective talent demand over two years is primarily driven by the IT services cohort’s low-to-no hiring action,” said Kamal Karanth, co-founder, Xpheno.

“Along with dropping average attrition rates to sub 14% and dropping capacity expansion, the IT services bellwethers have stayed away from campus for two cycles. This sharp drop in talent demand cascades and impacts the hiring confidence of other tech cohorts like tech products and startups,” he added.“This two-year record drop in demand from the IT sector collective is unprecedented and is sure to have a long-term impact on the talent supply chain for the sector. With entry-level talent not being added, the sector should brace for talent supply challenges when the buoyancy returns,” Karanth said.The total number of vacancies across industry sectors in the white-collar space stood at 210,000, down 24% from January 2023 and 35% from January 2022.

“The IT services sector is going through a systematic correction. The entry level has a talent glut with new campus graduates competing with the ones with 1-2 years of work experience, many of whom were laid off and are currently in the job market,” said Anshuman Das, CEO, Longhouse Consulting.

“The Indian technology industry continues to grapple with the global economic slowdown, as evidenced by sluggish revenue growth in the technology sector and a more cautious approach by clients due to the uncertain macroeconomic environment,” said Vamsi Karavadi, director at Deloitte India.

“There has been a noticeable decline in the demand for talent across all levels. Industry leaders are adopting a cautiously optimistic stance and taking a more measured approach in their investments. This caution is reflected in the decrease in net new hiring numbers for the leading technology players in the country,” he added.

Experts said the cautious stance will persist for the next two quarters.

“Recent technological advances, particularly in artificial intelligence, have also contributed to a decreased demand for certain jobs. Despite a robust pipeline of deals, industry experts anticipate that hiring will remain subdued in the near term, with a focus on improving employee utilisation amid weakened demand,” said Karavadi.


  • IT services current open positions at 50,000 on end-January, down 21% from 2023 Jan and over 60% from 2022 Jan
  • Software products sees 78% drop in hiring, startups see 73% fall in hiring in two years
  • 210,000 current active white-collar jobs, down 24% vs 2023 and 35% vs 2022

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Author: Shirley