The Indian IT sector faced headwinds in hiring throughout CY2024. The twin pressures of subdued demand growth and an overhang from the excess manpower added during FY22–FY23 contributed to a slowdown in recruitment. This was further exacerbated by rising attrition rates, leading to negative net employee additions in most of the industry’s major players, as per Icra.
While some recovery is visible in Q2 FY25, industry experts say that the hiring momentum will likely remain low until demand picks up toward the latter half of FY26. However, the hiring is expected to be better than CY24.
Hiring Slowdown And Attrition Impact
Icra’s analysis of the Indian IT services industry shows a sharp slowdown in hiring activity through FY24 and into FY25, a trend exacerbated by a rise in employee attrition. The seven-quarter period leading up to Q1 FY2025 showed negative net employee additions for its sample set companies. Among the leading IT firms, TCS, Infosys, and Tech Mahindra reported modest net employee additions of 8,000-11,000 each in H1 FY2025, while companies like HCLTech and Wipro saw continued negative net additions to their workforce.
The moderation in demand from key markets such as the US and Europe, alongside increased focus on enhancing employee utilisation, contributed to the flattening of gross hiring figures in recent quarters. The increased attrition, which had peaked at about 23 per cent during Q4 FY22 and Q1 FY23, gradually tapered off, stabilising at around 13 per cent by Q3 FY24. However, this decline still stands below pre-pandemic levels, where attrition rates were approximately 18 per cent.
Employee Cost Pressures And Operational Efficiencies
Employee cost as a percentage of operating income saw a steady rise, reaching 58 per cent in FY24 compared to about 54 per cent in FY21, largely due to wage inflation driven by attrition. This placed pressure on operating profit margins (OPM), which have been largely stable in the 21-22 per cent range over the last several years. While companies have been able to offset some of these pressures through enhanced operating efficiencies and improved employee utilisation levels, Icra’s report expects OPM to remain stable through FY25–FY26.
Neeti Sharma, CEO at TeamLease Digital, says that the slowdown in hiring to a combination of cost pressures and global uncertainties. “Top-tier IT companies slowed down hiring in 2024 due to cost pressures and the ongoing global economic uncertainty. Fresher intake dropped significantly, with some firms reducing hiring by over 50 per cent, while salary hikes were restricted to 5-9 per cent.”
This cautious approach to hiring, particularly at the fresher level, has impacted overall recruitment figures for the year. In FY2024, the Indian IT industry created only 60,000 new jobs, a contrast to the 2.7 lakh jobs created in FY2023. The subdued hiring numbers point to a broader trend of cost containment and operational caution that characterised the year.
Outlook For 2025: Recovery And Specialisation
While CY2024 was a year of restraint, the outlook for CY2025 is more optimistic, with hiring expected to see a decent uptick. TeamLease’s Neeti Sharma predicts a strong recovery in the fresher segment, with hiring likely to grow by 20-25 per cent in 2025. This growth will be driven by rising demand in key sectors such as BFSI (Banking, Financial Services, and Insurance), healthcare, and retail.
“The recovery in hiring will be led by a surge in fresher hiring in 2025, which is expected to grow by 20-25 per cent, and sectors like BFSI, healthcare, and retail will be key drivers, with fresher hiring in these sectors likely to grow by 30-35 per cent,” Sharma adds.
Alongside fresher hiring, the demand for specialised roles is set to increase, particularly in emerging technologies like artificial intelligence (AI), machine learning (ML), blockchain, and cybersecurity. Companies are expected to invest in upskilling and reskilling their workforce, focusing on acquiring talent with expertise in these high-demand areas.
The shift toward flexi staffing will also play a crucial role in 2025’s hiring landscape. This model, which includes temporary and contract-based roles, is projected to grow by 6 per cent, pointing to the continued adoption of flexible work arrangements across the IT sector. Flexi staffing, which is increasingly being seen as an efficient model to manage workforce fluctuations, is expected to reach a milestone, with over 6.25 lakh flexi staff members projected in the coming year.
Fresher Hiring And Sector-Specific Growth
The demand for tech talent, particularly fresh graduates, is expected to surge in 2025. The rise of digital transformation across industries like BFSI and retail will push the demand for skilled professionals, particularly in AI, cloud computing, cybersecurity, and data analytics. Indian IT firms are likely to ramp up their recruitment drives to meet this demand, with a particular focus on technical roles in high-growth areas.
“The next year will see fresher hiring rebounding strongly, and this will be accompanied by an increased focus on specialised roles. AI, cloud, and other emerging technologies will drive a fresh wave of hiring. Companies will particularly look for talent in cybersecurity, ML, and blockchain to stay ahead in the competitive market,” says TeamLease Digital CEO Neeti Sharma.
Icra’s report also aligns with Sharma’s forecast, expecting fresher hiring to be a critical growth area as companies look to build their capabilities in emerging technologies. The IT services industry is also expected to see increased hiring in high-demand segments, with the transition to digital platforms in sectors such as BFSI, retail, and healthcare.
With strong demand from both traditional and emerging sectors, hiring in the Indian IT industry is expected to grow by 8-10 per cent in 2025, with fresher hiring leading the charge.
