Nasscom sees IT revenues grow 9%, hiring drop 30%

The National Association of Software and Services Companies (NASSCOM) on Tuesday predicted that revenue growth in the information technology (IT) and BPO sector in the coming fiscal would remain almost flat at 7%-9% even as hiring would fall by 30%-50% compared to the current fiscal.

R Chandrasekhar, president of the IT industry association, said that the sector could end with a 7.8% growth in the current fiscal.

"In terms of export revenues we expect growth rate of 7%-9%. We expect the change to be positive and this is the band we see it happening. In the domestic revenue also, we expect a slight upswing to 10%-12% in the year ahead. The key trend is that the new-age digital is expected to grow at 1.5-2 times the growth in the rest of the revenue segment and domestic technology is now poised to be a double digit. The Indian market is increasingly driven by enterprise digital adoption and consumers becoming tech savvy," he said on the sidelines of Nasscom's leadership summit in Hyderabad.

On the jobs front, the lobby body estimated the IT sector to hire one lakh people in the coming fiscal compared to the projected 1.3-1.5 lakh people this fiscal.

Many HR experts believe that even the conservative IT job number given by Nasscom seemed propped up considering that most IT firms were moving towards higher automation and productivity by looking at higher revenue per headcount. The last few years have seen the revenue to job ratio only moving southwards. Meaning, employment growth in the IT sector has not been proportional to revenue growth.

Kris Lakshmikanth, founder and chairman, The Head Hunter Pvt Ltd, said that the cumulative headcount at top five IT services providers in the country last year came down by around 20,000. He said that even if Indian tech companies, who earned more than 50% of their revenues from the US market, wanted to hire more people, the market would not permit it.

"There is no way they (IT firms) can increase the headcount. The market will not accept it. If they (Nasscom) are talking of employment going up in this (IT services) sector, they are fooling themselves. Actually, they are fooling the government. This sector cannot and will not add employment, primarily, because their customers in the US are asking for billing rate cuts," he said.

According to him, since the government was closely watching employment and layoffs, the companies were not open about their hiring and firing.

"The instruction given to the operation team is don't hire people. They have been told try and do as little (hiring) as possible," said the HR consultancy firm executive.

Raja Shanmugan, former HR head, Happiest Minds, also said that revenue growth may not be directly proportionate to employment growth.

"People are trying to get more (revenues) out of less people. Revenue to headcount ratio will continue to change. The entire interest of the company is in getting higher revenue per headcount," he said.

Lakshmikanth was sceptical of growth figure too; "last year, they (Nasscom) spoke of 10%-12% and it (exports growth) finally came to 7%-8%. This year, if they are talking of 7%-9%, it will come at 5%-6%," he said.

On hiring numbers, he expected the actual number to be around 20,000-30,000 people compared to one lakh people estimated by Nasscom.

"If they are talking of one lakh hiring, maybe 20,000-30,000 jobs will be created but what will happen is along with that some 30-40,000 people will be sent home (laid off),"said Lakshmikanth.

He was optimistic about growth in domestic revenues and believes that focus on Indian market would fetch good revenues, albeit on a lower margin, for the domestic IT players.

"Many green shoots have appeared for growth revival in IT sector. They would be product-oriented, platform-oriented and cloud-oriented. So, they would be high revenue earners, but they may not provide that a higher level of employment. It is unlikely they will translate into mass employment of people (like in the past) unless you see a different kind of wave. I don't see that," said Happiest Minds's Shanmugam.

TECHTONIC SHIFT

• The IT sector would hire one lakh people in the coming fiscal compared to the projected 1.3-1.5 lakh this fiscal
   
• The new-age digital is expected to grow at 1.5-2 times the growth in the rest of the revenue segment and domestic technology is now poised to be a double digit