Special 
The delay in the onboarding of new employees by top IT and ITeS companies by up to 12 months has put the spotlight on the slowdown in the sector, primarily because of its exposure to the ongoing economic downturn in the West. Business Today had previously reported that Infosys, Wipro, HCL Technologies, Tech Mahindra, Accenture, and Capgemini have not given joining dates to some new employees despite handing them offer letters as early as September 2021.
Slump in Business
Techies claim that they have been awaiting an onboarding date -- also known as the date of joining -- in top IT firms since September 2021.
One such IT professional told Business Today, “I have offers from Infosys, Wipro, and Capgemini, given to me as early as September 2021. It has been over a year but they keep postponing the onboarding date.”
BT had reported previously that distressed job claimants had written to Infosys asking questions about the delay in their onboarding, to which Infosys responded via email by saying, “Please be informed that we are allocating DOJ based on our business requirement. We will send you a joining communication at least 2-3 weeks prior to your joining date.”
Another IT professional received a similar email response from Wipro. They told Business Today, “The company is writing to us and saying that they will give us a joining date as per business requirement. But why did they give us an offer letter if they had no business requirement?”
Capgemini, on the other hand, responded to distraught techies on social media by tweeting, “We understand your grievance. Rest assured, we will be honoring all the issued Letters of Intent. Our onboarding process is aligned with client requirements & staggered over time to factor in project schedules while providing the right training to new joiners.”
After being made aware of these developments, an expert closely tracking the IT sector told Business Today on the condition of anonymity, “They do not have as many projects as they did previously and hence, they have muted hiring.”
They further added, “All these offers were made when the IT sector was witnessing a boom, they had a plethora of projects so they went on a hiring spree. But the current global macroeconomic conditions have put a strain on the IT sector in general.”
Are the IT winters here?
These distressing stories beg the bigger question: what exactly is happening to India's much-vaunted IT sector and what could be the reason behind these legacy companies delaying onboarding despite giving the potential employees an offer.
A look at the earnings reports in the first quarter of the financial year 2022-23 shows that top Indian IT players, including Infosys, Wipro, TCS, and others, reported lower than expected profits. This led to margin pressures and IT majors scaled back on the variable payouts in the corresponding quarter.
Moreover, Infosys slashed the average variable payout to employees to about 70 per cent. Wipro held back performance compensation for employees in the C band and above while TCS postponed the same in the June quarter.
Harsha Upadhyaya, President and chief investment officer of Equity at Kotak Mahindra AMC told Business Today that the business momentum in the IT sector is stalling.
“We are already seeing some pressures on the margin across companies. The hiring numbers across the industry have been quite muted in the recent times. All these things point to the fact that business momentum in the IT sector is somewhat stalling," he said.
The earnings report of the second quarter of the financial year 2022-23 for Indian IT companies are expected to be released next week. ICICI Direct expects the growth momentum in the sector to continue but also estimates that high attrition would restrict margin expansion. Edelweiss expects TCS, Infosys, and Wipro to report a sequential revenue growth of 0.8 per cent, 2.9 per cent and 2.2 per cent respectively.
Upadhyaya further added, "While the management commentary is still quite positive, we believe that things are not likely to be the same as you go forward. There is every likelihood of 2023 IT budgets to get delayed or even curtailed to some extent."
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