In the year ending in March, approximately 60,000 outsourced contract workers lost their jobs in India’s IT sector as employment opportunities for flexi workers contracted by companies decreased by 7.7% compared to the previous year, according to a recruitment organization. Lohit Bhatia, president of the Indian Staffing Federation, stated, “The drop in new employment generation within the IT flexi staffing sector mirrored the global slowdown in IT hiring.”
Despite this, hiring in the manufacturing, logistics, and retail sectors remained robust due to strong domestic consumer demand. The $194-billion IT sector, which facilitated businesses’ adoption of online shopping and remote working during the pandemic, is experiencing a slowdown this year as employees return to offices and the Russia-Ukraine conflict impacts spending from European clients.
A JP Morgan analysts’ report issued last week cautioned that rising inflation, supply chain disruptions, and the effects of the Ukraine war could bring an end to the growth boom experienced by India’s IT services during the pandemic. Bhatia noted that IT sector flexi worker hiring declined 6% quarter-on-quarter in the March quarter, and the trend of hiring contract workers through third parties may continue to be weak in the software industry for the next few quarters.
India’s unemployment rate increased for the fourth consecutive month in April, reaching 8.11% compared to 7.8% in March, as reported by the Centre for Monitoring Indian Economy (CMIE). The Indian Staffing Federation revealed that overall demand for flexi workers also slowed in other sectors, with 177,000 jobs added through vendors in the 2022/23 financial year, compared to 230,000 in the previous year. Currently, Indian companies employ 1.4 million flexi workers, including one-fourth of women workers, through vendors.