As IT firms delay onboarding, experts call it ethically and morally wrong

Wipro's salary cut at the fresher level is perhaps the first ever instance in the industry

Top Indian IT companies delaying the onboarding of freshers hired in FY23 may give rise to a bigger problem, worsening the employment outlook for the tech talent completing their college degrees this year, industry experts warn.

What has come as a big shock and surprise has been the recent news of Wipro asking candidates who are yet to be onboarded to take a pay cut as projects in their category are not available immediately. This is perhaps happening for the first time ever in the industry.

Mohandas Pai, an industry veteran who was with Infosys as its chief financial officer said “Pushing the date of hiring for a month or two is understandable, but the companies should now hire the freshers and pay them the compensation they promised. Ethically and morally this delay is very wrong. It is a direct assault on their value system.”

He further added, “There has been deferment in the past, but it was because of sudden dips in the demand and the companies had later kept their promise by completing the hiring process. Today, the situation is different because all the firms are making huge profits and now they are so big, I don’t think they would have a big impact due to the onboarding of a thousand joiners,” he said.

Experts pointed out that onboarding freshers is not a huge cost for these top four Indian IT companies.

HR experts opined that the fresher talent is an employer market, which also explains that it has been more than a decade but the fresher level engineering salaries have remained constant at Rs 3.5 lakh to Rs 4 lakh. Of course, Indian IT players do differential hiring at this level where students have additional certification or scored exceptionally high. These salary levels range anywhere from Rs 6 lakh to Rs 8 to Rs 10 Lakh. However, these hiring numbers are still very small.

Kamal Karanth, the cofounder of specialist staffing solutions company Xpheno said: “We have seen two situations in the past – they either revoke the offer or they postpone it. In my memory, I have not come across a decrease in salary. Given the margin pressures and lower demand from clients, the firms are trying to correct the supply side of the pricing. We see this sustaining for at least another two quarters till the demand ratio changes and they can utilise it better.”

He added that the demand for niche, skilled talent between four to ten years of experience continued to be high. “Freshers are not billable resources right away. Also, that talent is available in plenty at this point in time. Campus recruitment will also be slower this year in terms of the absorption of fresher talent. Organisations are correcting their own price point to pay for fresher talent. They don’t have the same luxury in the four to 10 years experience, especially in the key digital skills like analytics, Pega, full stack, and other high skill requirements.” 

Wipro told Business Standard that it had to adjust its onboarding plans “in the light of the changing macro environment and, as a result, our business needs”.

Anshuman Das, the co-founder, and CEO of Careernet said the companies were going back from their commitment, which could cause more difficulties in the coming months. But these difficulties are for students.

“First problem is the onboarding of the 2022 batch, which is continuously getting delayed and they have a lot of pent-up offers. They have not been onboarded by January-February, which is the usual process. Another big problem is that all these companies have to visit campuses for 2023 graduates, which has not happened with a lot of companies. So what will happen to them is the bigger problem area in the industry,” Das said.

As per the quarterly results, India’s four largest IT services providers have together added less than 5,000 employees in the third quarter of FY23. The net headcount of TCS and Wipro saw a dip in the quarter. The workforce of TCS shrunk by 2,197 people, while Wipro’s headcount declined by around 500.

Das said “The companies are hesitant to make new commitments to the 2023 batch and if this condition continues till October-November, this year’s batch will almost be like a full casualty. It is definitely a sign of a bigger problem which is coming in the next six months.”

Wipro and Infosys have reportedly laid off hundreds of freshers from the 2022 batch after they failed an internal assessment. Even as the Indian IT industry has seen companies deferring from onboarding talent due to sudden changes in demand, experts say revising offers was an unusual situation.