Nearly 6 Percent of Contract Workers Lost Jobs in India's IT Sector in Past Year, Says Recruitment Body

Nearly six percent of outsourced contract workers lost jobs in India's information technology sector in the January-March period compared to the previous quarter following the impact of the global slowdown and Russia-Ukraine war, a recruitment body said.

The Indian Staffing Federation, a body of 120 recruitment agencies which provided about 60,000 outsourced workers, said nearly 6 percent or about 3,600 of these workers lost jobs in the March quarter.

India's IT sector employed nearly 5.1 million workers in the year ending March 2022, according to government estimates, and companies have fired thousands of contract employees while holding on to hiring.

"The drop in new employment generation within the IT flexi staffing sector mirrored the global slowdown in IT hiring," said Lohit Bhatia, president of the Indian Staffing Federation.

However, the hiring in the manufacturing, logistics, and retail sectors remained strong, helped by domestic consumer demand, he said.

The $194-billion (roughly Rs. 1,60,661,488 crore) sector whose software services helped businesses adopt pandemic-era practices of online shopping and remote working is facing a slowdown this year as employees return to offices and the Russia-Ukraine war weighs on spending from clients in Europe.

A report by JP Morgan analysts warned last week that soaring inflation, supply chain issues, and the hit from the Ukraine war will bring an end to the growth boom that India's IT services enjoyed during the pandemic.

The hiring of flexi workers in the IT sector shrank six percent quarter-on-quarter in the March quarter, Bhatia said, noting that hiring of contract workers through a third party may remain weak for the next few quarters in the software industry.

India's unemployment rate in April rose for the fourth month in a row to 8.11 percent, from 7.8 percent in the previous month, according to the Centre for Monitoring Indian Economy, (CMIE), a Mumbai-based think tank.

The Federation said overall demand for flexi workers slowed down in other sectors as well, adding 177,000 jobs through vendors in the financial year 2022/23 ending in March, compared with 230,000 workers in the previous year.

The number of flexi workers, hired through vendors by Indian companies has increased to 1.4 million including one-fourth of women workers. 

© Thomson Reuters 2023