The sun is back
After a year of salary freeze and compulsory leave, the great Indian middle class is smiling again even as the IT industry is coming out of the cloud cover, report Salil Mekaad and Kamayani Singh. See graphicsbusiness Updated: May 05, 2010 23:56 IST
Joseph M. George, 31, and Sussan Thomas, 29, were going to walk the aisle in April.
Although the two Bangalore-based information technology (IT) professionals had been seeing each other for three-and-a-half years, they had to postpone their marriage by about a year.
The reason was obvious: Global meltdown that hit the IT industry in 2008-09. “My increment got delayed, I was forced to take compulsory leave and pay cuts as projects didn’t kick off,” George said.
“I had purchased a premium flat then and we needed money to pay the loan, buy furniture and other things.”
Now, the marriage plan has been revived, as some of the biggest IT firms in India announced optimistic results for the January-March 2010 quarter. Projects are getting cleared and compulsory leaves and salary cuts have ended.
“Some of the big Indian IT firms have entered into mega deals in the last one year,” said Kumar Parakala, global head of sourcing with consulting firm KPMG.
“While the number of contracts they have entered into has declined, the value of contracts has increased by 47 per cent in the Americas and by 10 per cent in Europe.”
For the January-March 2010 quarter, revenues of TCS, Infosys, Wipro and HCL grew at 7.9 per cent, 5.5 per cent, 8 per cent and 7.5 per cent, respectively, over January-March 2009.
Parakala said although growth at the moment is uneven, this is driving demand. The top four IT firms of India get 50 to 60 per cent of their revenue from the US.
“The domestic IT/BPO market should reach $15 billion by the end of this year growing at 12 per cent. Next fiscal, it could grow at 15-17 per cent reaching $17.5 billion,” he said.
Hiring, splurging spree
And with new contracts safely in the bag and revenues rising, companies such as TCS, Infosys and Wipro plan to do fresh hires.
At the peak of the slowdown, there were hiring freeze and deferred salary hikes. “Wipro announced out-of-routine salary hikes in February after 18 months,” said Pratik Kumar, executive vice-president, human resources, Wipro.
TCS has already made 20,000 campus offers for 2011. Infosys plans to recruit 30,000 this year.
“We are spending $134 million (on wage hikes), the largest in the history of the Indian IT industry, unless someone makes a superior claim,” said Mohandas Pai, director, human resources, education and research, and administration, Infosys.
The attrition rate, too, seems to have increased. In the January-March 2009 quarter, 3,163 employees left Infosys. The figure for January-March 2010 quarter was, however, 70 per cent higher at 5,399.
The attrition rate at Wipro in January-March 2010 in their global-IT services division was 17.1 per cent – all of which was voluntary.
“Even small and medium IT firms have started hiring,” said Devesh Updhyaya, director, iQuest Consultants, a Noida-based job placement firm. “There has been a 50 per cent increase in hiring in IT since this time last year.”
Staffing firm TeamLease in its employment outlook survey for April-June 2010 said IT would be among the top hirers in this quarter.
The non-resident Indian (NRI) community, too, is taking interest in the Indian IT job market. Online portal astroyogi.com, which answers astrological queries, claims NRIs are looking for IT jobs in India.
“Since January 2010, queries by NRIs for jobs in India have increased by 27 per cent. And 15 per cent of these have been for IT jobs,” said Meena Kapoor, founder and chief executive officer, Netway India, which owns astroyogi.com.
Good life industry
Before the slowdown, the IT sector had become symbolic of the aspirations of India’s middle class. And for a city like Bangalore, whose growth is driven by the IT industry, the sector’s revival has fuelled the growth of other sectors, such as realty, hospitality and even marriage.
“The revival of the IT sector has led to an increase in demand and prices of all kinds of property, including the premium segment, which showed a slump of 8-10 per cent last year,” said D. Sriniwasan, chief executive officer, Confederation of Real Estate Developers Associations of India (Karnataka), the apex body for private real estate developers in India.
Back on rails
George, who was struggling to repay his house loan a few months a go, moved into his new home, fitted with a modular kitchen, an LCD TV, new furniture and latest amenities.
“During the slowdown, some companies I dealt with decided to give up premium accommodations they rented out for their employees and clients,” said Virendra Achara, 44, a real-estate agent in Gurgaon, where several IT/BPO firms have their offices.
“In the last two-three months, at least five BPO companies have got in touch, looking for rented premium apartments again.” With 80 per cent of tourists to Bangalore being business travellers, the hotel occupancy rates have increased by 10-30 per cent, after dropping by 27 per cent between 2008 and 2009.
And it seems that George might not be the only IT professional getting married soon.
“The demand for IT professionals (in the marriage market) has picked up,” said Murugavel Janakiraman, founder and chief executive officer Bharat Matrimony.
Post script: George and Thomas got married on May 2 in Kerala. The couple is going to Gangtok for honeymoon.