A few mid-sized information technology providers registered a net increase in workforce in fiscal 2024 offering a sharp contrast to the steep decline in headcount at India’s top tier IT firms in a year marked by tapering demand for technology services due to macroeconomic and geopolitical uncertainty.

At least six mid-sized IT firms, including the likes of L&T Technology Services (LTTS) and Birlasoft, posted net additions of nearly 7,000 employees for the full year ending March 2024.

“The primary driver for the positive headcount movement of the mid-tier firms is what we call “the pond they fish in,” said Deepti S, business head for tech staff augmentation at recruitment firm Xpheno.

Despite the slowdown last year, calendar year 2024 opened with a notable uptick in tech and engineering services, research, and development (ER&D) demand from domestic businesses and global capability centres (GCCs). This prompted mid-tier firms to continue hiring cautiously with a focus on utilisation and margins, according to recruitment experts.

Some of the mid-tier IT firms built their growth strategy and order books around domestic businesses, global capability centres of large multinationals and the automotive and engineering businesses, as their size and agility allowed them to respond quickly to emerging domestic business dynamics, they added.

A Nasscom-BCG report in 2023 said India stands as a prominent hub for ER&D outsourcing, with a spending of around $44 billion-$ 45 billion in 2023, with expected spending reaching $130 billion-$170 billion in 2030.

Angan Guha, CEO and MD, Birlasoft said his firm is focused on driving transformation for clients but expects to see “a lot of pressure on the discretionary spend going forward.” He also noted that “growing automation might have an impact on headcount in future.”

Currently, even as most large IT companies battle with single digit or negative growth, mid-tier players’ especially in the engineering services domain, are seeing a high growth trajectory.

To be sure, mid-tier IT firms had emerged as strong recruiters even earlier, having posted a net headcount addition of almost 10,500 employees in FY 2023. However, the overall weakness in demand for technology services in FY24 shaved off one-third of fresh hiring even at these firms.

In the same period, India’s largest IT firms including Tata Consultancy Services (TCS), Infosys, Wipro, and Tech Mahindra, posted a reduction of nearly 70,000 in workforce for fiscal 2024. In contrast, these firms had recruited a total of 81,610 employees in FY23.

The downturn in hiring also affected some mid-tier firms as well such as Persistent Systems, KPIT Technologies and Tata Elxsi as well.

“Our basic focus is how to improve per person productivity, but at the same time looking at our growth and building our competency. And so, we continue to hire significantly and will hire in three digits from campuses,” said Kishor Patil, co-founder, CEO & MD at KPIT Technologies.

A few mid-sized information technology providers registered a net increase in workforce in fiscal 2024 offering a sharp contrast to the steep decline in headcount at India’s top tier IT firms in a year marked by tapering demand for technology services due to macroeconomic and geopolitical uncertainty.

At least six mid-sized IT firms, including the likes of L&T Technology Services (LTTS) and Birlasoft, posted net additions of nearly 7,000 employees for the full year ending March 2024.

“The primary driver for the positive headcount movement of the mid-tier firms is what we call “the pond they fish in,” said Deepti S, business head for tech staff augmentation at recruitment firm Xpheno.

Despite the slowdown last year, calendar year 2024 opened with a notable uptick in tech and engineering services, research, and development (ER&D) demand from domestic businesses and global capability centres (GCCs). This prompted mid-tier firms to continue hiring cautiously with a focus on utilisation and margins, according to recruitment experts.

Some of the mid-tier IT firms built their growth strategy and order books around domestic businesses, global capability centres of large multinationals and the automotive and engineering businesses, as their size and agility allowed them to respond quickly to emerging domestic business dynamics, they added.

A Nasscom-BCG report in 2023 said India stands as a prominent hub for ER&D outsourcing, with a spending of around $44 billion-$ 45 billion in 2023, with expected spending reaching $130 billion-$170 billion in 2030.

Angan Guha, CEO and MD, Birlasoft said his firm is focused on driving transformation for clients but expects to see “a lot of pressure on the discretionary spend going forward.” He also noted that “growing automation might have an impact on headcount in future.”

Currently, even as most large IT companies battle with single digit or negative growth, mid-tier players’ especially in the engineering services domain, are seeing a high growth trajectory.

To be sure, mid-tier IT firms had emerged as strong recruiters even earlier, having posted a net headcount addition of almost 10,500 employees in FY 2023. However, the overall weakness in demand for technology services in FY24 shaved off one-third of fresh hiring even at these firms.

In the same period, India’s largest IT firms including Tata Consultancy Services (TCS), Infosys, Wipro, and Tech Mahindra, posted a reduction of nearly 70,000 in workforce for fiscal 2024. In contrast, these firms had recruited a total of 81,610 employees in FY23.

The downturn in hiring also affected some mid-tier firms as well such as Persistent Systems, KPIT Technologies and Tata Elxsi as well.

“Our basic focus is how to improve per person productivity, but at the same time looking at our growth and building our competency. And so, we continue to hire significantly and will hire in three digits from campuses,” said Kishor Patil, co-founder, CEO & MD at KPIT Technologies.