• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

Raja Simhan T.E.

CHENNAI, May 6

CITY-BASED companies such as DSQ Software, SSI Ltd and Polaris Software in their guidance said they would start fresh recruitment in the next few months. Could this be the first sign of recovery in the Indian IT sector that has been struggling in the last 12-15 months? And, does it mean an end to the retrenchment and a restart to recruitment in the IT sector?

Yes, the first sign of recovery is coming up in the sector, feel IT analysts and recruitment agencies.

Says Mr Bhupinder S. Ahuja of Deutsche Securities Asia, an IT analyst, "There is some sign of stabilisation taking place in the IT industry, and a better demand-supply match than a year ago. Over the last 12-18 months, many companies have reduced their bench through limited recruitment and, hence, improved utilisations. For any future growth, these firms need to start recruiting from now on."

Polaris recently offered letters to around 93 MBAs and 65 technology trainee candidates through campus recruitment. DSQ in its guidance said it planned to recruit "technical resources" shortly, while a top SSI official said the company would start recruiting some time in July-August.

"We believe the recovery is happening. The guidance from the results announced by the IT majors such as Infosys and Wipro has been largely positive; coupled with announcements for new projects points to a recovery in the business. The US economy also seems to be heading for a recovery. All this means more recruitment," says Mr K. Pandia Rajan, Managing Director, Ma Foi Consultants, a city-based HR consultant.

The reason why the demand may get pushed to the second quarter was that there was some excess capacity, which would be utilised before fresh recruitment kicks off, he said. "However, we do not expect the demand to reach the same stratospheric levels as before," he added.

The last 1-1/2 years have come as a consolidation phase to Indian IT industry. "As per our research, we expect about 7,500 new jobs to be created in the sector this year, and signs of that happening are already evident," says Mr Pandia Rajan. Ma Foi executed a large-scale recruitment assignment for an IT major and has bagged a couple more in the last two weeks, he adds.

Ms Saundarya Rajesh of Avtaar Consultants, another city-based HR consultant, says that on a conservative estimate, the number of fresh recruitment during the July-September quarter would be around 1,500-2,000 in Chennai alone. This includes programmers and IT service enablers.

"The IT sector is definitely showing signs of recovery. It seems that the shakeout phase has partially ended and the existing companies would just have to offer the best service at a competitive rate to slice up the market pie," she says.

Talking about shakeout, it may be recalled that for the quarter ending March 2002, the total number of employees at SSI Ltd dropped to 793 from 967 in the previous quarter. Similarly, manpower at Polaris dropped to 2,544 during the fourth quarter of 2002 from 2,563 in the previous quarter.

According to Mr Pandia Rajan, the imminent turnaround in the US economy was sure to push up the IT market, but the pressure on pricing would continue. Therefore, the focus would remain on offshore projects. All the large-scale IT recruitment mandates that the company serviced was for offshore software development centres. The same theme was repeated with the scaling up of Indian operations by global majors such as Intel, Microsoft, Accenture and Geometric Software, he added.

Mr Pandia Rajan said that the recruitment focus this time round was mostly around banking and financial software, SAP development, bio-informatics and associated technologies.

"We expect Mainframe and Java technology platforms to drive the demand in the banking and financial services vertical," he added.

Another area where Ma Foi expects a big demand-supply gap was in embedded software. Very few companies work in this area but the demand is expected to grow sharply in the next six months.

Demand for Oracle professionals is expected to sustain as the company keeps coming up with better versions.

Polaris' CEO, Mr Arun Jain, in a recent conference call with analysts on the quarterly results, said the company's focus was on quick recruitment at the middle management level.

The company was looking at around 40 middle management people from a solution architect to business analysts to project manager, and the process has already started, he added.

The junior management recruitment would be on `just-in-time' basis, and the company had filled a majority of such positions through campus recruitments.

"The challenge in the next three months would be to recruit 30-50 good people who can focus the middle management of the company," he said.

Says the SSI spokesperson, the general feeling in the industry was that the volume of work was picking up slowly and by September or October the increased volume could raise the utilisation rates (percentage of total people on projects to total billable) to the 75-80 per cent levels. This would in turn trigger some hiring.

In SSI's case, the utilisation was 92 per cent, above the industry average, and was a conscious decision to keep the bench and, thus, costs low.

"If volumes start going up, we may start hiring a little earlier than the industry," he said.

It would be tough to put a number to this hiring since it is so project dependent, he added.

Send this article to Friends by E-Mail

Stories in this Section
Parliament okay for Budget

Copyright © 2002, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line