Placement woes. How IT sector correction led to dip in hiring at engineering campuses

The dark days of the pandemic may be over, but the Covid period is still indirectly impacting campus placements. Engineering colleges, including the feted IITs have reported a sharp decline in placement offers as well as median salary packages this year. At the Sona College of Technology, Salem, B Saravanan, Director of Placements, says IT services companies like Infosys, Wipro and Tech Mahindra have not recruited for their entry-level job roles. He says, “The lockdown period during Covid deceived the planning of most of the IT services companies across the globe. They were hoping that all walks of our life will be totally digital. But that did not happen.”

Neelesh Gupta, Director, Deloitte India, says, “We’ve observed a 26 per cent decline in pre-placement offers and campus hiring activity this year. This is due to three main reasons — global economic uncertainty impacting MNCs, IT sector correction affecting mass uptake and shifting priorities of organisations towards upskilling and retaining their current talent. This trend is also complemented by a reduction in attrition, especially among BTech and MTech graduates.”

Adds Gupta, “We also observed a drop in salaries offered to this year’s BTech and MTech graduates, primarily from the top 10 campuses. Tier-1 and Tier-3 campuses saw a marginal increase, whereas Tier-2 campuses experienced a decline.”

IT’s inflection point

Data from TeamLease Digital too shows a dip in both placements as well as average salaries at the IITs this year (see chart), which is why there have been shockwaves in the industry. But Krishna Vij, Business Head, IT Staffing, TeamLease Digital, is confident this is a temporary blip and says, “While 2024 has witnessed a significant decline in placements, the competencies and knowledge fostered within these esteemed institutions are poised to endure the test of time. Although there has been a steady escalation in median salaries, a decline in average salaries has been observed, possibly linked to a market correction and the disruptive influence of emergent technologies and tools.”

In Hyderabad, The International Institute of Information Technology (IIIT-H), reported a slower placement pace this year. “The placement process for the 2024 batch at IIIT Hyderabad is progressing slower than last year, influenced by geopolitical uncertainties and the prevailing recession. There has been a noticeable decline in hiring numbers among NASDAQ, S&P 500 and other private entities,” an IIIT-H spokesperson said. Though the institute says that some more companies are expected to continue the hiring process and start-ups have arrived in significant presence.

When speaking with various engineering colleges, a common observation emerged — computer science engineering is the stream that is most affected.

Offering the industry perspective, Anil Ethanur, Co-founder, Xpheno, a specialist staffing company, says the entry points for fresh engineering grads are sectors that lead the talent building process. Talent build is where qualified engineers are onboarded and trained by employers to make them job ready. This is a huge cost overhead for enterprises, as every 10,000 freshers absorbed add ₹400-450 crore to the compensation cost load in the first year. Add to this the other overhead costs, management cost and the non-billing hours and this process goes beyond the reach for mid and small enterprises. The tech sector and its bellwethers, especially the IT Services leaders are the ones who lead the ‘talent build’ process.

He points out that the IT Sector, in its most buoyant hiring year of 2021, absorbed six lakh freshers. The numbers have since dropped and the sector collectively did a sub-70K entry level absorption last fiscal. Given that 9,00,000 engineers graduate every year, when the large talent consumers from IT don’t go to the campuses, the year will be a tough one for the freshers.

Skill up for stability

Gupta says tepid placements are impacting engineering graduates in two-ways. “On one hand we’re seeing an increased preference for higher education, and on the other, a focus on acquiring in-demand skills to enhance employability.”

Some like Shanmuga Sundaram, Director, Centre for University Industry Collaboration, Anna University, remain hopeful. He says hiring by Tata Consultancy Services and Cognizant Technology Solutions — both are bulk recruiters — is going on till June 15, and have assured large numbers (roughly over 200 in each). “I am confident that we will meet at least our year-in-year regular placement of 90 per cent and above in UG Circuit Branches and 85 per cent placements in core engineering,” he said.

Saravanan of Sona College advises: “Students must understand the reasons for the sudden decrease in the freshers’ hiring requirements and reorient their preparation, knowledge and skills expectation, in terms of the market’s current needs.” He says considering the fact that the current slowdown is more in IT services sector and not in product development, students must focus on equipping themselves with advanced programming knowledge and get trained and certified in future workforce areas like AI/ML, data analytics, cloud computing, cybersecurity, IoT, RPA.

(With inputs from KV Kurmanath and Chitra Narayanan)