Hiring Slowdown in Indian IT Services Amid Policy Uncertainties and AI Upskilling

The Indian IT services industry is experiencing a hiring slowdown due to policy uncertainties and reduced tech spending in key markets. Despite some recovery, hiring remains subdued as companies upskill employees for AI-driven opportunities. This moderation is expected until growth picks up by H2 FY2026.

The Indian IT services sector is witnessing a subdued hiring phase, primarily driven by reduced discretionary tech spending in key international markets like the US and Europe, amid macroeconomic uncertainties. The new US government also introduces policy uncertainty, potentially impacting the industry further in the short term, ICRA reports.

Companies such as HCL Technologies, Infosys, and Tata Consultancy Services are grappling with these challenges even as they focus on increasing employee utilization and counteracting the aftereffects of high attrition rates experienced earlier. Consequently, net employee addition has seen a negative trajectory for several quarters up to Q1 FY2025.

Looking ahead, the growth in adopting Generative AI is pushing these firms to upskill existing staff, resulting in a tempered approach to new hiring compared to pre-COVID-19 periods. Revenue per employee metrics remain stable, although a rupee depreciation against major currencies hints at potential improvements.

(With inputs from agencies.)