IT sector's rising contractual hiring shows demand uptick

The tide seems to be slowly turning for India's information technology companies, as staffing and recruitment services firms say they are witnessing a pickup in contractual hiring in the sector after almost a year of subdued demand.

A pickup in contractual hiring often indicates improvements in the demand environment for IT services providers. According to experts, this is typically followed by hiring for permanent roles.

Amid a slowdown in tech spending by clients in markets like the US and Europe, Indian IT companies had cut down on hiring and, in some cases, also resorted to layoffs. This has resulted in a reduction in their bench strength, or employees who are not assigned any project. As they win new projects, hiring temporary employees helps companies quickly deploy workers to meet client requirements. "With layoffs reducing this reserve (bench), the current contractual hiring rate has surged by around 40-50% compared to the same time last year," said Neeti Sharma, chief executive officer at TeamLease Digital.


"Despite the single-digit (revenue) growth for some IT services majors, the uptick highlights the urgent need to replenish and expand the workforce following these reductions, through contractual workforce for flexibility," Sharma said.

Executives at other staffing firms like Quess, Adecco, CIEL HR and Xpheno, and recruitment service providers such as Michael Page also said contracts were making a comeback. Companies ramp up contract hiring based on their strategies to be prepared for future demand, order book positions and specific client demands among other things, said experts. As global uncertainties stabilise, there is an expectation of increased IT spending, they said.

Michael Page said it had seen a 22% year-on-year increase in overall contracting, including by IT services companies, during the January-March quarter. "Sectors such as consumer durable, IT, ecommerce, GCCs and retail have a major demand in contract hiring," said Pranshu Upadhyay, regional director at Michael Page India. The skill sets in high demand within the technology staffing space include Google Cloud, data analytics and AI/ML, he said.

Other key skills in demand include application development, ERP, networking, GenAI and cybersecurity.