The upward momentum in hiring across all sectors, which began in 2021, continued through the first half of 2022. Thereafter, there was a significant collapse in the labor market, with companies having not only held back hiring, but also laid off. However, as the year draws to a close, there are indications of an improving market in the near future.
In 2023, the retail, BFSI and automotive sectors are expected to experience 20% growth in hiring over the past year. IT could see moderate growth in the first half and is expected to pick up in the second half, according to estimates from foundit (formerly Monster APAC&ME), a talent management platform.
Hiring activity in December got off to a good start, following a two-quarter decline. Overall, trends point to an increase in hiring intent, and the next few quarters could see intent cross the 70% mark, according to a report from TeamLease.
There will be a slow but steady recovery in recruitment/talent acquisition across all sectors. Hiring in sectors such as real estate, retail, technology and BFSI is already on an upward trajectory despite a slow-growing economy and high inflation. Talent will also be sought in the fields of education and health.
Sekhar Garisa, Chief Executive Officer (CEO) of foundit, a Quess company, said, “Despite a slowdown in the hiring of tech talent over the past few months, several sectors, such as education and healthcare, are increasingly relying on technology to drive efficiency and productivity, indicating that skilled talent will always be in demand.”
Infographic credit: Nihar Apte
Growth before fall
There has been a phase of uncertainty in the labor market since July due to the global economic scenario. While there was an 8% growth in hiring in the first half of the year, there was a 3% decline in the latter part of the year, according to founder Insights Tracker.
The banking, financial services and insurance (BFSI) sector saw the highest demand for professionals in 2022, marking a 25% annual growth in hiring.
The BFSI industry focuses on digital transformation, neo-banks, artificial intelligence, cloud, cybersecurity and cognitive computing, which offers an array of opportunities for job seekers, notes the founder .
In addition to BFSI, telecommunications/ISPs, production and manufacturing, automotive/accessories/tires and retail were the top industries in terms of hiring activity. But hiring declined in media and entertainment, engineering, cement, construction, iron/steel, education, consumer packaged goods, food and packaged food.
At the start of 2022, companies across all sectors faced the challenges of talent shortages and wage wars, amid inflated salaries and expectations from 2021, says Kamal Karanth, co-founder of Xpheno, a specialized recruitment company. “Companies, hungry for talent, had disrupted the market with higher than usual salary packages in 2021. The impact of this continued into early 2022.”
The tides changed from April 2022, when rising inflation and the threat of recession saw companies slash hiring targets.
Infographic credit: Nihar Apte
cause and effect
The overheated talent acquisition funnel in 2021, with hyper-hiring, in anticipation of a buoyant 2022, is the main reason for a surge in layoffs, experts say.
Tighter access to funds in an inflationary market has led to an overhaul of talent acquisition plans across all sectors. This led companies to shed the extra fat they had accumulated over the boom year.
“In the readjusted market, the new challenge is to access quality talent at an affordable cost,” says Kamal.
According to a report by TeamLease, there has been a 33% increase in attrition in startups, mainly due to an increase in global divestments in certain sectors. Unicorns and soon-to-be horns also face a substantial churn rate of 27%.
From large US-based tech companies such as Amazon, Meta, Twitter and Microsoft to small startups, businesses have been forced to downsize. Several startups that raised a lot of money in 2021 are also laying off people because their businesses suddenly hit a roadblock and they don’t have clarity on the next phase of growth.
According to market estimates, based on publicly disclosed figures in India, there were 18,000 to 20,000 layoffs in the technology industry in 2002. However, Xpheno estimates, based on talent conversations and the activity of job seekers, that technological layoffs would be 24,000 to 25,000.
Sectors where most layoffs have taken place this year include edtech (8,000), consumer services (5,000), e-commerce (2,500), health tech (1,000) and fintech (1,000), according to data from Xpheno.
In 2022, many organizations risked their brand image by laying off employees. Learning from past mistakes, organizations will be cautious in the future. They now understood the need for accuracy in workforce forecasting. Over the coming year and beyond, more and more employers will turn to data-driven decision-making in their hiring process.
“We will see an accelerated adoption of machine learning HR technology to calculate the optimal number of employees required for sustainable growth. This will prevent employers from over-hiring or under-hiring,” says Sumit Sabharwal, CEO of TeamLeaseHRtech.
Infographic credit: Nihar Apte
Xpheno’s Kamal is cautious when he says 2023 will be the year of “hiring fixes” and that recent layoffs, to optimize talent and cost, could continue to cause ripples in 2023.
Companies will take a close look at the skills, experience, and compensation of employees to assess whether or not their compensation is right for them. Companies can choose to replace high-cost employees with moderate-cost talent.
As the global economy slowly returns to normal, margin-sensitive industries will continue to maintain tight and conservative hiring plans. On the bright side, the retail, BFSI and automotive sectors are expected to experience growth in hiring.
IT roles will be in demand across different industries, but there may be a talent shortage for roles in emerging technologies. Therefore, companies will need to focus more on training their current workforce. This is where certifications will play a major role in hiring tech talent and validating their skills and knowledge, notes the founder.
Mumbai, among metros, and Ahmedabad, among Tier II cities, are expected to lead online recruitment activity in India, according to foundit. Growth projections in sectors such as BFSI, retail, automotive, real estate and construction will drive increased demand for talent in these cities.
Bangalore and Delhi-NCR are expected to lead in hiring in the automation market. Among other Tier II cities, Coimbatore is expected to lead the pack with IT services, BPO and automotive components as growth drivers.
Although the current global crisis, with massive layoffs, a hiring freeze and an impending recession, has significantly affected the service sector globally, especially the IT industry, sentiments in India seem somewhat positive.
“Sentiment in India continues to be on an upward trajectory, with 77% of employers indicating a higher hiring prospect (based on a survey),” says Mayur Taday, chief commercial officer of TeamLease Services.
The coming year will see trends such as increased use of digital media, automation and analytics, workgroup reskilling and development, and a focus on diversity, equity and diversity. inclusion, leading to demand for talent and consequent hiring.