IT sector may hire less and reduce pay hikes; attrition to come down. Source-The Economic Times

HCL Technologies, India’s fifth-largest software exporter, says attrition rates will decline in the coming year. “The company’s hiring strategy has so far been based on project needs and will maintain the ratio 50:50 of freshers and laterals”, an HCL spokesperson told ET.

US-listed IT firm iGate Patni says campus hiring could come down significantly in the next year. iGate plans to hire anywhere between 10,000 and 12,000 freshers in 2012 compared to 7,000 in 2011, which it is says is much lower in proportion to the revenue growth it expects.

“Tier 1 and Tier 2 companies hired in large numbers in 2011. Hence there is sufficient resource in most companies. This could result in a slowdown in hiring. We expect lateral hiring too to be moderate in 2012 and this might result in unemployment among the middle level staff”, said Srinivas Kandula, global head of human resources at iGate Corporation, said.

Mid-tier IT firm MindTree says there is a ‘cautious optimism’ in the industry and expects attrition levels to decline to 12% in the coming months against 18% in the previous quarter. “While there is no negativity within the IT industry, macroeconomic pressure from the Eurozone and North America and inflationary trends in India could play crucial role in deciding next year’s salary hikes and hiring statistics”, says Babuji Abraham, global head of people function at MindTree. MindTree, which made around 3,000 campus offers this year, expects the numbers to be the same or slightly go up in the coming year.

“Companies are cautious about the future. This year’s Christmas sales in the US might give us a better picture about the coming year; it is going to reflect the consumer confidence in North America”, he added.

iGate also expects a significant drop in attrition rates. “Attrition rates will decline in the coming year as the number of opportunities fall. iGate expects it to be anywhere between 16 and 20% in 2012, compared to 21% in 2011”, Kandula says.

While companies say the double-digit wage inflation seen in 2011 will continue, consultancy firm Mercer expects wage hikes to be moderate in the coming year. According to Mercers Compensation Planning 2012 report, pay levels in Indian companies will see a lower double-digit increase in 2012 due to both inflation and talent shortages.

Given the depreciation of rupee against dollar, companies like MindTree and iGate expect a moderate hike in wages in the coming year. “Expect it to be between 10 and 12% in 2012”, Kandula said. A weaker rupee would help the Indian software exporters with higher repatriated earnings, as the largest proportion of their revenues comes from the US.