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Published: Mar 28, 2023
Updated: Mar 28, 2023

Global Banking Crisis Causes Slowdown in IT Hiring, Puts Pressure on Indian IT Industry

The ongoing crisis affecting global banks in the US and Europe is set to have a significant impact on the Indian IT industry. Indian IT companies earn almost 40% of their revenue from the banking, financial services, and insurance (BFSI) sector. The recent bankruptcy of several US-based banks and a merger in Europe is expected to almost halve net headcount growth in the IT industry in the coming fiscal year. Experts predict that lower deal pipelines and demand outlook from the BFSI sector will lower manpower demand.

New Deals Will Take a Hit

While major tech initiatives already underway by financial firms will continue, new deals are expected to be affected. IT services players are already making discrete layoffs, but experts predict that they will accelerate in the current climate. Staffing firms have noted that mandates from the tech sector are moderating and most major players are sitting on excess capacity. As a result, they may look to reduce the pace of attrition refills in freshers' level and freeze senior hires.

Hiring to be Moderate

The slowdown in tech spends of BFSI is expected to push down the net headcount of IT services cohort by 40-50% in FY24 compared to FY23. Hiring at capability centers of global banks will also be moderate. Companies have yet to complete onboarding their 2022 campus hires, indicating a reduced market demand. Experts, however, predict that there are likely to be tailwinds for the sector.

Banking crisis accelerates fear of recession; slows down hiring

The ongoing crisis in the banking sector is expected to have a significant impact on the IT industry in India. The slowdown in tech spends of BFSI is likely to result in a decrease in manpower demand, causing a slowdown in hiring. Staffing firms predict that mandates from the tech sector will moderate, and major players will look to reduce the pace of attrition refills. The net headcount of the IT services cohort is expected to fall by 40-50% in FY24 compared to FY23. While experts predict that the sector will face headwinds, they also believe that there will be tailwinds in the future