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Job situation bleak as hiring slumps by 45%

Last updated on: October 30, 2017 15:14 IST

Wipro, Steel Authority of India, HDFC Bank, Mahanagar Telephone Nigam, Bharat Heavy Electricals and Reliance Commnications among companies reporting a decline in headcount in FY17.

The increase in net employees at India’s largest companies slowed down to 66,000 people in the 2016-17 financial year compared with 123,000 people a year earlier.

At the end of FY17, a total of 3.25 million people were on the rolls of 241 companies of the BSE 500 index versus 3.19 million at the end of FY16.


Data on employee strength was not available for the rest of the BSE 500 index companies.

Tata Consultancy Services (TCS), Tech Mahindra, ICICI Bank and Axis Bank were the large employers to lead fresh hiring during FY17.

In all, 136 firms - out of the 241 companies in our sample - reported an increase in their headcount in FY17, same as a year ago.

Out of this, nearly a fourth (32 companies) increased their headcount by 10 per cent or more.

TCS was the topper and added a little over 33,000 people, taking its total employee strength to 387,000.

TCS was followed by Tech Mahindra, whose employee strength was up by 12,500 people in FY17, taking its headcount to 118,000.

ICICI Bank and Axis Bank reported net additions of around 9,000 and 7,000 employees, respectively, during FY17.

In percentage terms, the biggest increase in headcount was reported by non-banking finance companies (NBFCs) such as Cholamandalam Investment and Finance, Bajaj Finance, Capital First and Edelweiss Financial Services, among others.

At the other extreme, Wipro, Steel Authority of India, HDFC Bank, Mahanagar Telephone Nigam Ltd, Bharat Heavy Electricals and Reliance Communications topped the chart for reporting a decline in their headcount in FY17.

Experts attributed this to the general slowdown in the economy.

“A decline in net headcount addition by corporate houses complements the slowdown in industrial growth and demand slowdown being faced by software exporters. There could be some improvement during the second half of the current financial year, but we have to see if it can compensate for the near freeze in hiring by IT companies,” said G Chokkalingam, founder and managing director, Equinomics Research & Advisory.

These 241 firms report the number of employees in their annual report every year. The data for IT companies is on a consolidated basis, while for others it is on a stand-alone basis.

Corporate India slowed down hiring despite an improvement in their profitability and revenue growth in FY17. The combined revenue of the companies in the sample was up 7.6 per cent year-on-year (y-o-y) in FY17, a sharp turnaround from 4.8 per cent decline a year ago.

Their net profit was up 18 per cent y-o-y in FY17, against three per cent decline in FY16.

This, according to experts, could be because corporate executives have low confidence on future prospects.

“The improvement in corporate profitability in the last fiscal year was largely due to a rise in commodity prices after a sharp decline in the previous year.

Hiring decisions, however, are based on the management outlook on future growth prospects, which actually worsened in the last fiscal for majority of the companies,” Chokkalimgam said.

A slowdown in hiring, however, had a marginal impact on employee remuneration.

The average remuneration per employee was up 8.2 per cent y-o-y in FY17 to Rs 12.4 lakh per annum, up from Rs 11.5 lakh per annum a year ago.

HR experts foresee an improvement in overall hiring next year, led by sectors such as infrastructure, NBFCs, private sector banks and automotive space.

“Hiring at senior levels has picked up pace in these sectors in the recent months. Many companies are now coming back at campuses, looking for fresh talent.

This should start reflecting in entry-level hiring in the next 12 months,” said Suresh Raina, managing partner, Hunt Partners.

Photograph: Mike Blake/Reuters

Krishna Kant in Mumbai
Source: source