India IT services companies heighten candidate scrutiny, take longer to close mandates

India’s IT services talent landscape continues to present a bleak picture for the next two quarters ending September 2024 with mandate fulfilment or conversion ratio at an all-time low of about 25%, a sharp decline from the pre-pandemic period (FY20) fulfilment ratio of 48-52%.

Staffing firms said though demand has started reviving, especially for niche areas such as Artificial Intelligence and cyber security, the hiring process has become more rigorous, with companies investing more time and effort in candidate selection.

Data from Teamlease Digital suggests that despite the improvement in demand by 50% compared to Q4FY23, the fulfilment ratio is at 25-27% due to increased scrutiny by employers.


“There is far more scrutiny, multiple rounds of interviews and much longer time taken to close a position,” said Sunil C, chief executive officer, TeamLease Digital.

Candidate intent to switch jobs was all-time high of 70-80% during the post-pandemic peak hiring period of 2021-22, he said. “That was a candidate-driven market and a golden period for candidates as there was a talent war among the employers to pick the talent available in the market to meet post-pandemic digitisation demand needs.”

“Now, although the demand started flowing in across the skill sets including niche areas like AI, ML, data science and cyber security; companies have deployed stringent scrutiny processes as they want to be very sure about their hiring decisions in terms of employee productivity to sustain the market competition in future,” said Sunil.

Even GCCs, which are ramping up their manpower in India, are also being extremely selective about hiring as there is a glut of talent and companies do not have the bandwidth to train talent for long and thus preferring readily deployable talent.

“If earlier, we hired 100 people in the sector in a month, we now hire about 60 and out of that, the GCC composition has increased from about 10% to about 20% of the overall number,” said Aditya Narayan Mishra, CEO, Ciel HR Services.

“However, even the global captives of MNCs in India want ready-to-deploy talent. Barring the large GCCs, the hundreds of others who are ramping up their presence in India do not have the bandwidth to create skilling set up on a large scale,” he added.

According to data from staffing firm Xpheno, the volume and velocity of staffing consumption by the tech sector has been flat over the last four quarters – in line with the headcount degrowth that the major talent consumers have had over the year.

“Overall subcontracting and outsourcing spends of the bellwethers as reported, have collectively shrunk by 10% on a YoY basis, under sustained margin pressures,” said Sundar Eshwar, Business Head, IT Staffing Services, Xpheno.

Drop in talent demand and lowering urgency for lateral and just-in-time workforce has impacted the velocity of the hiring funnel. End-to-end recruitment process timeframes have significantly moved up by at least 25-30% over the year, according to Xpheno estimates.

“Companies are looking for talent that is readily deployable and also professionals who they think can be promptly reskilled. This kind of scrutiny will continue to remain in the tech sector especially as the expectations from service providers is changing,” said Vamsi Karavadi, director, human capital consulting at Deloitte India.