InfoTech services, startups likely to hire 5 lakh people in 2019
Hyderabad: India's information technology (IT) services sector and startups together are expected to hire up to five lakh people in 2019 as demand for freshers is on the upswing, an industry veteran said Wednesday. Former Chief Financial Officer of IT major Infosys Ltd, T V Mohandas Pai said entry-level packages in the industry went up by as much as 20 per cent in 2018, after stagnation in salaries for the past seven years.
"Growth is coming back to the Indian IT services industry," he said, talking about industry highlights in 2018 and prospects in the coming calendar year. Pai said 2018 saw "H1B visa situation getting tougher," Indian companies focusing more on Japan and southeast Asia, massive expansion of captives and buy-backs by big companies.
Hyderabad has become a hot destination, with many new age firms coming to the Telangana capital, thanks to good infrastructure, and "very good marketing" by KTR (K T Rama Rao, who served as IT Minister in the previous TRS government), according to him.
He also said Indian companies were now trying to expand in markets in Asia much more vigorously, particularly Japan which is "opening up" and southeast Asia. Reskilling of employees in IT services companies has redoubled, Pai said. "More than half the people have been reskilled in all the IT companies in India. Digital income is growing in double digits for all the companies. 2018 has been a good year".
Hiring has gone up, he said. "First time in seven years, hiring compensation (entry-level) has gone up by 20 per cent. Fresher compensation is going up, after a long time. It's a good news". Entry level packages are now pegged at 4.5 lakh to Rs 5 lakh per annum, as companies are beginning to pay more to attact "higher quality".
"For many years, entry-level compensation packages had not gone up, demoralising people. In fact, delivery boys in cities make 50,000 rupees a month, much more than software engineers. It's ridiculous," Pai said. He listed greater use artificial intelligence and machine learning in enterprises, greater thrust on digitisation, bigger spending by BFSI (banking, financial services, insurance) in America, as being growth opportunities for Indian IT companies in 2019, which will also see them look for greater penetration into Europe and Asia.
But the challenges for them are going to be localisation in America. "You must become more local in America, most of them (Indian companies) are trying to do. And they are finding that when you are local, cost actually is not increasing because you are going to smaller towns where costs are much less".
The year 2019 is going to be better for entry-level guys because hiring is going to be much better, said Pai, also Chairman of Manipal Global Education Services, and Aarin Capital, and a member of the Board of Directors of the National Stock Exchange of India Limited.
Start-ups have a total of 600,000 employees in India. "In the coming calendar year, my estimation is they (startups) will hire about 200,000 people. In 2018, I think they hired 150,000 people", he said. "Totally between IT services and start-ups, my estimate is 4.5 lakh to five lakh people will be hired (in India in 2019)".
In 2018, the IT services companies and startups together are estimated to have hired 3.5 lakh to four lakh people. "Now start-ups are becoming big. There are 39,000 start-ups (in India), every year 5,000 startups come up (in India), so when the startups are beginning to hire, they hire all kinds of people, not only engineers, whereas services companies will hire more engineers and (those for) BPO (business process outsourcing," Pai said.
The Indian IT industry faces threats from rising protectionism, data flow curbs and fast-changing technological shifts but is keeping its hopes high for the new year with plans afoot for big investments in automation and artificial intelligence. For the industry body Nasscom, 2018 has been the year of 'Digital at Scale' as IT firms focussed on leveragin new technologies and ensuring sustainability by creating right skills with help from innovation, policies and partnerships.
The year ahead is "punctuated with several transformative opportunities", Nasscom President Debjani Ghosh said.
The industry body has projected exports to grow at 7-9 per cent for 2018-19, almost same as the previous fiscal,
but domestic revenue may grow faster at 10-12 per cent and this may make the new year transformative with overseas funds accounting for a lion's share so far.
Over years, the industry has graduated from being the back office of the world to being at the forefront of change, helping clients optimise operations and stay ahead of competition. Protectionist stances are being seen across key markets — be it the US, the UK or Australia — with governments bringing in more stringent regulations around procurement of work visas. As a counter, Indian IT firms are ramping up their local presence abroad by hiring locals.
Ghosh said rising protectionism continues to be an irritant and the anti-immigration rhetoric discriminatorily targets Indian companies and challenges the level playing field for business delivery. The companies, however, are upbeat on opportunities.
Cyient Executive Chairman BVR Mohan Reddy said the Indian technology industry's business model has moved away from cost-arbitrage to solution provisioning and value creation. He exuded confidence that visa issues will not be a concern for a sustained growth of the industry.
Mindtree CEO Rostow Ravanan said his company is closely watching international issues and is geared up to deal with this dynamic scenario through greater local hiring and other measures.