According to an ET report, in 2022, Cognizant, based in the US, hired 132,000 employees, while the French IT consultancy firm Capgemini recruited a total of 140,789 employees, not including those hired through acquisitions.However, in 2023, the number of employees hired by Cognizant dropped to slightly over 60,000, whereas Capgemini recruited approximately 61,182 individuals. To put it differently, there was a decrease of 72,000 in the hiring numbers at Cognizant and 79,607 at Capgemini compared to the previous year.
Top Indian IT service providers such as Tata Consultancy Services, Infosys, and Wipro have also experienced a decrease in their workforce, which decreased by approximately 70,000 in total in the fiscal year that ended on March 31.
IT Sector Hiring Trends
Peter Bendor-Samuel, who is the chief executive of consultancy firm Everest Group, was quoted as saying that these service providers hired more employees than needed during the Covid pandemic to compensate for the high attrition rate and in anticipation of the industry’s high growth rate to persist. However, the industry has shrunk, leading to an excess supply of talent in these companies.
Due to macroeconomic uncertainty, the lack of natural attrition did not assist them, leading the companies to significantly decrease the intake of new talent. Although Indian IT service providers avoid discussing layoffs, Cognizant began a program in the second quarter of 2023 to simplify its operating model, optimize corporate functions, and consolidate and realign office space to adapt to the post-pandemic hybrid work environment.
During 2023, Cognizant faced $115 million in employee separation expenses and $114 million in costs related to facility exits and other expenses, amounting to a total of $229 million.
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“Another factor which is also contributing to the firms’ hesitancy to hire is the belief that Gen AI will reduce the need to hire L1s (in level 1) or freshers,” Samuel added.
The number of employees at Cognizant decreased by 7,100 in the March quarter of FY24 to 344,400 from the previous year. Approximately 250,000 of its employees work in India. The total number of employees at the Capgemini Group decreased to 337,200 as of March 31, 2024, which is 6% lower than the previous year. The offshore workforce accounted for 57%, or 192,000 employees, of the total headcount, a decrease from 58%, or 207,300 employees, in March of the previous year. Indians made up approximately 66% of Capgemini’s total headcount as of December 31, 2023.
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Pareekh Jain, the Chief Executive Officer of EIIRTrend, highlighted two factors contributing to the decline in hiring numbers. “There is an overall tech spend slowdown, and IT firms are relying on inorganic growth rather than on their organic growth. This is the reason why there are more acquisitions happening at a time when hiring is very slow. They are reluctant to hire and train.”
Jain added, “The second factor is that in these times of AI and GenAI, companies are also finding it difficult to get the right talent and skills for such requirements. Market has no matching supply for these skills.”