Not AI, IT hiring not picking up because of global slowdown in IT spend: Ramani Dathi, Teamlease Services

Ramani Dathi, CFO, Teamlease Services, says on the non-IT side, a very positive outlook as far as hiring is concerned across all segments like BFSI, FMCG, FMCD, pharma, tourism, hospitality and manufacturing. The monsoon is expected to be positive for this year. We believe that the upcoming festive season can also be very good for retail, FMCG, FMCD and other related industries.

Overall, how is the hiring outlook right now versus six months ago or at the start of the year? Are things materially different when it comes to IT, banking, tourism etc?
Ramani Dathi: Let me start with IT because as far as IT is concerned, we are not seeing any kind of pickup in the hiring momentum at this stage. We expected that maybe in the middle of this year there could be some green shoots, but to be very honest as of now we are not seeing any kind of major uptick as far as demand is concerned.

There are a few set of clients, especially the GCCs, to some extent they are able to maintain the current run rate of revenues and headcounts for us, but to show a massive growth or a double-digit growth we have to have the IT services hiring to be back on track and as I said at this stage we are not seeing any kind of pickup on IT front.

However, on non-IT side, we are seeing very positive outlook as far as hiring is concerned across all segments, be it BFSI, FMCG, FMCD, pharma, tourism, hospitality, manufacturing, across all sectors we are seeing very good outlook and in fact with the monsoon being expected positive for this year we believe that the upcoming festive season can also be very good for retail, FMCG, FMCD and other related industries.

But what is it that you are looking at when it comes to some of the other segments, in terms of manufacturing for example, what has been the kind of traction that we have witnessed on ground or which are some of the other segments that are seeing robust growth?
Ramani Dathi: Within manufacturing right now, we are seeing a good amount of demand from smartphone manufacturers, chip manufacturers, EVs and other new-age companies because these are the sectors where new job creation is getting generated. So, it is not just the transition of converting informal jobs to formal jobs, these are all the industries that are generating new set of jobs and this we believe will continue to give us maximum hiring for the next two to three years as well.

However, there are certain challenges in terms of mobilisation of the right skill set people and upskilling them, facilitating them. All of those challenges were there, but even with all of those we are seeing very good numbers kind of lining up for manufacturing and also in the allied industries. And also, in non-manufacturing segments like auto or what we say other allied segments, we are seeing at entry level jobs, we are seeing good amount of demand and this is spread across the country. Unlike earlier we used to have specific concentration in few regions that we are seeing getting more and more widespread now.

You briefly mentioned GCCs. What kind of growth rate are you seeing? Is it a sudden mushrooming of GCCs in certain areas? How is that entire space picking up?
Ramani Dathi: Especially post-Covid, we have seen the growth of GCCs both in terms of the sheer number of new GCCs set up in India as well as the headcount with the existing GCCs. So, both are growing at a very good encouraging rate and this in fact has helped us to maintain the run rate in our specialised staffing business.

Whatever headcount and revenue run rate that we lost on the IT services front, so that got fully offset by the GCCs and they will continue to drive almost 70% of the hirings that we are planning for the next one year. We believe 70% of them will be backfilled with GCC open positions and again within GCCs right now we are seeing the maximum demand coming from the BFSI segment and this will continue for the next one year as well.

With respect to the overall stake of AI versus the jobs, of course, we have seen that now at least play out for the last 12 months. According to you, why has IT hiring slowed down?
Ramani Dathi: Yes, it may not be exactly AI. It is mainly because of the global IT slowdown, especially driven by US and European economies. In AI, maybe it is too early to assess whether it is the only reason or the main reason for the current decline in IT hiring.

To some extent, it can affect and more than the number of jobs, it has already started eating into the salaries, be it in terms of hikes and the overall salary range, it may get slightly impacted. But at this stage, we believe it is too early to nail it down to AI, ML, those kinds of new-age technologies. It is still going to be predominantly because of the global slowdown in IT spend.