Grappling with the economic downturn, most Indian companies have frozen their hiring plans for the short term, even as majority of them still rule out layoffs as a way of controlling costs, a PwC survey released on Thursday said.
Over three-fourth (76 per cent) of the respondents are reviewing their recruitment strategy to manage their costs in these unprecedented times, the survey by global consultancy PricewaterhouseCoopers revealed.
The report stated that most companies have frozen or deferred hiring and are adopting a 'wait-and-watch' policy.
However, most companies are shying away from employee layoffs as a way of controlling costs, with as much as 84 per cent of the respondents voting against it.
The survey, carried out across 12 sectors and over 100 respondent companies, found that the IT/ITes sector is severely conservative in its hiring plans, with 84 per cent firms stating they have put a freeze on recruitment.
Moreover, about one-third of Indian companies (35 per cent) revealed they have frozen salary increments for the coming year and are reducing bonus or variable pays.
"Most companies in India are gearing up for tough times but are avoiding knee-jerk reactions, employers are uncertain about the extent, duration and depth of economic slowdown and the timing of a recovery," PwC India leader (People and Change Practice) Sankar Ramamurthy said.
The Banking, Financial services and Insurance sector (BFSI) is among the worst hit, with more than half of the respondents focusing on recruitment freezes in the wake of the economic downturn.
Interestingly, a smaller number of companies, about 21 per cent in the financial services sector, have also admitted to considering layoffs, even as 43 per cent mentioned selective hiring plans.
Other sectors which have put a freeze on their recruitment plans include FMCG (70 per cent), Manufacturing (63 per cent), BFSI (57 per cent).
Meanwhile, retail is another sector which has been badly hit by the slowdown with the major growth plans witnessing a setback and respondents from the sector were not averse to resorting to layoffs if other actions proved insufficient.
Further, smaller firms with employee strength of less than 100 are focusing on selective hiring for critical positions only.
As per the PwC report, the top three focus areas which are being addressed by most companies during the downturn are recruitment, employee policies and compensation.
The PwC survey also revealed that about 70 per cent of the companies were making changes to their compensation policy and the same percentage have revised their employee policies and practices.
A significant majority of companies plan to re-deloy their workforce to businesses that are relatively better off.