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India Inc's hiring trends disappoint
Tue, 20 Oct Pre-Open

How is the Indian economy faring? Is the economic recovery underway? Let's look at an economic indicator that may offer us some hint - hiring.

It appears that the hiring trend of major Indian companies is not quite encouraging. Before getting into the reasons, let's consider some data reported in Business Line.

As the financial daily reports, the headcount at 150 companies in the CNX500 index grew at a tepid 3% during 2014- 15. This is much lower compared with the 6% average rate of additions seen in the past three years. Moreover, the same trend was imitated by Nifty companies as well.

The trend in the ongoing fiscal year is not encouraging either. For example, annual job growth in the media industry settled at 28% in year ending September 2015. This was as against 59% during the same period a year ago. Hiring growth in the banking sector stood at 8% in the year ending September 2015. The same was reported at 36% during the year ending September 2014. Manufacturing and IT sector, too, saw similar trends.

What does this slowdown in hiring reflect?

  1. Economic slowdown
  2. Shift in hiring paradigm

Economic Slowdown

Amid the slow domestic economic recovery and the turmoil in the global economy, anxious employers have cut back on their hiring plans. In fact, some major companies have even witnessed a drop in their headcount. For instance, engineering major Larsen & Toubro has reported 19% reduction in its employee headcount. Tata Motors witnessed a 5% dip in employee strength. And so has been the case with State Bank of India and ICICI Bank.

The New Paradigm: Quality over Quantity

Companies have given up clinging on volume hiring. The new shift in strategy for companies is focusing on productivity. Employers are hiring experienced people. This is particularly seen in the IT sector. And they are spending well on these employees. This trend of 'quality over quantity' is being witnessed in large IT companies.


We can say that companies are feeling the heat of cash crunch in the face of slow growth and stressed profit margins. In order to sustain their profitability levels, they are aiming at cost cuts in all possible ways. The trimming of the workforce is one such measure. While it may not be good news for the overall economy and particularly from a job creation point of view, but it will help companies achieve cost efficiencies and improved productivity.

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