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India IT services
Back to school – Channel checks on
campus hiring
Event
We interacted with placement officers of ten engineering colleges in two cities
– Mumbai and Bangalore – to gauge the campus hiring environment. Our
checks indicate a strong hiring environment, and if Indian IT companies are
seeing a demand slowdown, the caution is not yet visible in their campus
hiring plans.
Impact
Key takeaway – strong momentum in campus hiring. The mood on the
campuses seemed upbeat, with companies’ hiring numbers higher than for
the last placement season. Some colleges we spoke to also have companies
visiting campuses for placements in the next two to four weeks. So on an
overall basis, the on-the-ground campus hiring pattern shows no letdown in
Indian IT companies’ demand expectations.
Fresher salaries remain flat. The companies are offering starting salaries in
the range of Rs300–320k, which is similar to last year’s range. Outside of
currency, the absence of wage inflation for entry level employee salaries is
one of the most effective margin levers in the business model.
Lateral hiring – determinant of immediate demand pull. We recognise that
lateral hiring (ie, addition of personnel with more than three years of
experience) is a more accurate indicator of immediate demand but would not
write off the strong campus hiring trends.
How does the campus hiring cycle work? Campus hiring currently
underway is for the batch passing out in April–June 2013 and joining the
workforce in 2Q/3Q FY13.
IT vendors fight out for day 1 slots – TCS emerges as hard negotiator.
Placement officers we spoke with flagged increased competition amongst
different IT vendors to secure the day 1 slot. This slot essentially helps a
company to recruit the best talent ahead of competing vendors. TCS was the
most aggressive company negotiating for exclusive day 1 slots.
Sector leaders remain aggressive to protect their turf. One of the key
things the companies learned from the GFC period was that they must
manage employee perceptions. This was one of the key differences in the
divergent growth profiles evident at different vendors coming out of the
downturn. Hence, Indian vendors have developed a strategy of having a
larger bench in case demand turns anaemic than risk losing the volume share
due to a talent crunch.
Outlook
Remain positive – prefer TCS and HCLT. We believe the FY13 demand
outlook for Indian IT vendors remains uncertain. We think Tier 1 Indian
vendors have a proven business model that can deliver sustainable doubledigit
growth in the medium term.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
India IT services
Back to school – Channel checks on
campus hiring
Event
We interacted with placement officers of ten engineering colleges in two cities
– Mumbai and Bangalore – to gauge the campus hiring environment. Our
checks indicate a strong hiring environment, and if Indian IT companies are
seeing a demand slowdown, the caution is not yet visible in their campus
hiring plans.
Impact
Key takeaway – strong momentum in campus hiring. The mood on the
campuses seemed upbeat, with companies’ hiring numbers higher than for
the last placement season. Some colleges we spoke to also have companies
visiting campuses for placements in the next two to four weeks. So on an
overall basis, the on-the-ground campus hiring pattern shows no letdown in
Indian IT companies’ demand expectations.
Fresher salaries remain flat. The companies are offering starting salaries in
the range of Rs300–320k, which is similar to last year’s range. Outside of
currency, the absence of wage inflation for entry level employee salaries is
one of the most effective margin levers in the business model.
Lateral hiring – determinant of immediate demand pull. We recognise that
lateral hiring (ie, addition of personnel with more than three years of
experience) is a more accurate indicator of immediate demand but would not
write off the strong campus hiring trends.
How does the campus hiring cycle work? Campus hiring currently
underway is for the batch passing out in April–June 2013 and joining the
workforce in 2Q/3Q FY13.
IT vendors fight out for day 1 slots – TCS emerges as hard negotiator.
Placement officers we spoke with flagged increased competition amongst
different IT vendors to secure the day 1 slot. This slot essentially helps a
company to recruit the best talent ahead of competing vendors. TCS was the
most aggressive company negotiating for exclusive day 1 slots.
Sector leaders remain aggressive to protect their turf. One of the key
things the companies learned from the GFC period was that they must
manage employee perceptions. This was one of the key differences in the
divergent growth profiles evident at different vendors coming out of the
downturn. Hence, Indian vendors have developed a strategy of having a
larger bench in case demand turns anaemic than risk losing the volume share
due to a talent crunch.
Outlook
Remain positive – prefer TCS and HCLT. We believe the FY13 demand
outlook for Indian IT vendors remains uncertain. We think Tier 1 Indian
vendors have a proven business model that can deliver sustainable doubledigit
growth in the medium term.
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