Everest Group Talent Demand Growth Index | India IT Services | Blog

May 24, 2024

Welcome to our monthly India IT services talent demand index. We are excited to bring you this comprehensive analysis, powered by Talent Genius™, our AI-powered insights platform purpose-built to guide IT and Business Process Services location and workforce decisions. To gain a deeper understanding of the capabilities of Talent Genius and learn how to book a demo, watch this quick 2-minute video, Introducing Talent Genius™.

Monthly India IT services talent demand tracker

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Here is our in-depth analyses of the India IT services industry demand:

June 2024

The Indian IT services market saw a further decline of 5% compared to the month of May. Job postings decreased by 4% in Q2 2024 compared to Q1 2024, and on a year-on-year basis, the market dropped by a notable 24%. Additionally, GBS center setup activity also significantly declined in Q2 compared to Q1.

At the city level, among tier-1 cities, Mumbai, which experienced the highest decline last month, saw the highest growth of 8% this month. Conversely, Bangalore faced the steepest decline of 16%. Among tier-2 cities, Thiruvananthapuram saw a 21% increase in IT services job postings. At a quarter-to-quarter comparison level (Q2 2024 vs. Q1 2024), most of the Indian cities have seen a double digit decline in IT talent demand.

At the industry level, retail saw a significant increase of 34% in June. The cyclical commodities industry continued its momentum with 14% growth. However, the BFSI and technology and communications sectors experienced the highest declines, at 16% and 11% respectively.

May 2024

In May 2024, the Indian IT services market saw an additional 11% decline compared to the previous month. This trend is anticipated to be temporary, largely influenced by the ongoing nationwide elections.

Hiring has declined across all experience levels, except for executives with 16-20 years of experience. Entry-level hiring has been particularly affected and experienced a decline of 17%. While traditional roles such as developers and help desk engineers continued to witness a decline in demand, niche roles such as AI/ML engineers, data scientists, and UI/UX architects showed positive hiring trends.

At the city level, Chennai was the sole Indian city to observe an increase in talent demand. Among tier-1 cities, Mumbai saw the steepest decline at 17%, followed by Bangalore and Delhi NCR with declines of 12% and 11% respectively. Among tier-2 cities, Ahmedabad saw the largest decline at 33%.

In terms of sectors, the hospitality and tourism sector, which had seen the highest growth in talent demand in April, experienced the highest decline in May 2024 at 14%. This was followed by service providers, consumer packaged goods, and professional services sectors. Cyclical commodity was the only sector that saw a growth in this month.

April 2024

After experiencing robust growth of 23% in March 2024, the Indian IT services market saw a slight 3% dip in talent demand in April. However, on a year-on-year basis, the market has grown by 39%.

At the city level, among tier-1 cities, Kolkata experienced the highest growth at 17%, while Pune and Mumbai saw moderate growth of 5% and 3%, respectively. In contrast, Hyderabad and Chennai witnessed declines of 16% and 12%, respectively. Among tier-2 cities, Jaipur and Ahmedabad showed the highest growth at 8% and 7%, respectively, whereas Coimbatore and Thiruvananthapuram both saw a 10% decline.

The hospitality and tourism sector experienced the highest talent demand growth in April, increasing by 16% compared to March, fueled by a surge of tourists during summer breaks. Conversely, healthcare and retail saw declines of 12% and 10%, respectively. On a year-on-year basis, all sectors saw growth in demand, with transportation and logistics, and business and professional services recording the highest increases at 85% and 68%, respectively.

AI/ML and Data science remain highly sought-after skills, propelled by a growing emphasis on technological advancements and the integration of AI expertise.

March 2024

Following a 14% decline in job postings for IT services in February, the industry regained momentum, showing a 23% month-on-month increase in job postings. At a year-on-year level, talent demand grew by 20%.

Some of the most in-demand roles include artificial intelligence engineer, machine learning engineer, virtual reality engineer, and UI/UX architect, showcasing sustained demand in the India IT market for niche roles. Demand growth for specialized roles has been consistently higher than traditional IT roles, especially since the latter half of 2023, driven by the gen AI revolution.

At a city level, all the major cities experienced double-digit growth in March, except Mumbai, where the demand increased by only 3%. Tier-2/3 cities continue to consistently experience higher demand growth than tier-1 cities, pointing to increased leverage of tier-2/3 markets for IT services.

From a sourcing perspective, both service providers and enterprises experienced an increase in demand. Enterprises recorded a solid 29% increase (compared to service provider’s 9%), reflecting the strong inclination and propensity toward insourcing.

All sectors, except transportation and logistics, saw heightened demand for IT talent, with technology, communications, and retail experiencing the most traction.

February 2024

Following robust growth in January, the Indian IT services market experienced a 14% decline in February. Talent demand for IT services this month declined 23% compared to the same period last year and 50% from February 2022.

Most cities saw a decrease in demand except for Thiruvananthapuram. After showing the highest increase in January, Jaipur had the sharpest decline of 25%. Among tier-1 cities, Mumbai saw the steepest drop at 20%.

All sectors, except transportation and logistics and cyclical commodities, witnessed a decrease in talent demand, with retail, hospitality, and tourism showing the most significant declines.

Looking at role rankings, demand for artificial intelligence engineers, machine learning engineers, analytics consultants, and UI/UX architects climbed compared to the previous month, indicating continuing interest in niche roles.

January 2024

The demand for IT services in India surged by 31% month-on-month, following a 25% decline in December 2023. However, demand increased 11% year-on-year.

Roles such as artificial intelligence engineer, machine learning engineer, security engineer, and UI/UX architects experienced significant increases in demand in January 2024 compared to the prior year, primarily driven by the heightened need for niche roles in India.

All major tier-1 and tier-2/3 cities saw an uptick in monthly job postings, with Hyderabad leading with a 40% growth rate. Among tier-2/3 cities, Jaipur experienced the highest demand growth, with a 34% increase in job postings.

Demand for IT services rose across all industry segments. Healthcare and BFSI showed the most strength, with a 40% increase from December 2023.

December 2023

Demand for IT services in India hit a 17-month low due to declining spending and clients postponing projects. As a result, most Indian IT service providers are reexamining revenue and hiring forecasts. The overall demand across service providers decreased by 28% from last month and 11% from the previous year.

Many service providers slowed hiring, realizing they posted jobs too early and hired ahead of the demand. Service providers are now focusing on improving employee utilization rates and do not anticipate the job requirements returning to the original levels anytime soon. Demand for IT services also declined by a notable 20 percent across enterprises from November.

Overall, the second half was slower than the first half, with demand falling by 7% for service providers and 4% for enterprises. Service providers were impacted more as enterprises cut discretionary spending and insourced some work.

At the city level, demand for employees declined consistently across tier 1, 2, and 3 cities. After peaking in November, the workforce requirements in Hyderabad and Chennai fell significantly by 32% this month.

Demand hit its lowest point of the year across all segments. Despite relatively stable employment over the last few months, retail and healthcare had the biggest drop at 35%. While it is uncertain if this is the bottom, a full recovery is not expected in the near future.

November 2023 update

IT services demand in India increased by 9% month-on-month and 5% year-on-year. Demand for IT application data management (ADM) grew 9.5%, and IT infrastructure increased 5 percent compared to the prior month. However, the surge is expected to be temporary because macroeconomic conditions pushed IT project timelines ahead for most companies.

Talent demand increased more in tier 2/3 cities than tier 1 cities, indicating that enterprises are increasingly confident in hiring outside tier 1 cities to gain a labor cost arbitrage advantage.

The number of available positions increased in all tier 1 cities, except Kolkata, where the job postings fell for the second consecutive month. Since the prior month, job openings increased 18% in Hyderabad and 14% in Chennai, representing the highest month-on-month increase.

Among tier 2/3 cities, Jaipur recorded one of the highest month-on-month increases in open positions at 34%. All the other cities experienced increased monthly postings – except for Chandigarh and Thiruvananthapuram.

IT services demand increased across all industry segments, with service providers and manufacturing demonstrating the most strength, up 5% from October.

Demand fluctuates more for service providers than other enterprises. As clients cut back on outsourcing spending, the talent need from service providers is expected to decrease in the coming months.

October 2023 update

The demand for IT services in India declined by 9% from last month but increased by 5% year-on-year, with significant variation over the past few months. Despite the shifts, demand remains near the same level as May 2023, when IT services demand increased after being at its 12-month lowest the prior month.

Tier 2/3 cities continued to be more attractive for companies seeking employees. Hyderabad and Kolkata had the biggest monthly drop in talent demand among tier 1 cities at 15% and 12%, respectively. Employee talent needs remained the most stable in Pune, with only a 5% drop compared to the previous month.

Although demand for most roles declined, help desk engineer, data analyst, and business analyst roles continued to increase by about 5% monthly. Only the retail segment maintained net positive month-on-month growth rates at about 7%. Cyclical commodities and service providers declined the most by 12% and 7% month-on-month.

Over the past few months, India IT talent demand has been volatile across roles, cities, and industries. Talent demand is expected to continue to fluctuate as major Indian IT service providers lose contracts and enterprises explore more insourcing opportunities.

September 2023 update

The demand for IT services in India jumped by 19% on a month-on-month basis after declining for two consecutive months. The year-on-year increase of 22% pointed to a significant uptick in hiring activities this month, rebounding from the slowness over the previous few months.

On a month-to-month basis, demand again surged in tier 2/3 cities compared to tier 1 cities. The increased reliance on tier 2/3 cities suggests a growing client preference for cost-effective IT service delivery locations.

Among tier 1 locations, Hyderabad and Kolkata bounced back the strongest with 36% and 35% growth in demand on a month-on-month basis. All locations in the three top tiers showed increased IT services demand – except for Pune, which dropped slightly.

Every major industry segment, except for banking, financial services, and insurance (BFSI), returned with increased demand. Service providers led the chart with a 22% increase in job demand compared to last month. However, BFSI declined 23% from the prior month.

August 2023 update

The demand for IT services declined for two consecutive months after recording a 14-month high in June 2023. Demand fell by 16% month-on-month and 32% on a year-on-year basis. At a segment level, IT ADM and IT infrastructure declined from July.

This trend could be a result of a quick fix by employers to adjust for the hiring surge in the second quarter of 2023. If the pattern continues, employee attrition will rise. However, the demand will likely pick up in the next few months as the end of the year nears.

Tier 1 cities continue to experience a higher decline in demand than tier 2/3 cities on a month-on-month basis, indicating the preference by enterprises to leverage low-cost talent from tier 2/3 cities.

At a city level, Kolkata witnessed the sharpest decline in demand at 47% and had an all-time low in the last 20 months. Among leading tier 2/3 cities, Kochi and Thiruvananthapuram showed the least decline in month-on-month demand.

The surge in demand by industry sectors halted, with consumer packaged goods registering the greatest decline since July. Business and professional services also reversed the growth trend.

A slightly higher decline in month-on-month demand across service providers that has continued for several months now clearly indicates increased insourcing by enterprises.

July 2023 update

While the month-on-month view showed a 9% drop in the IT services talent demand trend in India, demand grew 17% over the prior three months and by 32% year-on-year.

Tier 1 cities witnessed a relatively higher decline than tier 2/3 cities month-on-month, showcasing the increased leverage of tier 2/3 Indian cities. This trend is consistent across most tier 1 and tier 2/3 cities. Jaipur and Coimbatore are the only exceptions across tier 2/3 cities, showing 10% and 3% growth, respectively. Among tier 1 cities, Mumbai and Kolkata witnessed the highest decline, while Pune recorded the lowest decline of approximately 2%.

Service providers witnessed the highest decline of all industry verticals for IT services demand over the past year. Business and professional services and consumer packaged goods saw a slight uptick in demand.

June 2023 update

The demand for IT services in India showed further recovery and grew by 15% compared to May 2023. For the first time in the last six months, demand also showed growth on a year-on-year basis (21% growth compared to June 2023). At a segment level, both IT ADM and IT infrastructure segments witnessed 14-month high demand levels in June 2023, with IT infra talent demand growing 40% on a year-on-year basis.

The growth trend, which started in May, is solidifying and was consistent across all cities, though the extent of recovery varied. Chennai saw a modest recovery, whereas Mumbai saw a significant spike in demand. We believe the demand surge in Mumbai may not be entirely due to net new demand but could be due to talent management/attrition challenges arising from the hybrid/in-office model and the need to back-fill resources.

The demand from service providers continues to grow, and we believe there is more focus on hiring laterals this year compared to the previous year, which saw a significant uptick in campus hiring. This increase could also be due to multiple large deals that are at play in the market and providers hiring in anticipation of winning large business in the medium term.

May 2023 update

The demand for IT services in India showed a recovery in the month of May, growing by 34% compared to the previous month and staying flat compared to 2022. This spike compared to March and April could be attributed to buyers placing demand ahead of the summer in key onshore geographies, which tend to be slower from a business perspective. The increase in demand was consistent across both tier-1 and tier-2/3 cities; however, the recovery was much steeper for tier-1 cities (growing 14% YoY) compared to tier-2/3 cities (shrinking by 20% on a YoY basis). Among the tier-1 cities, all showed an uptick in demand; however, Pune set a demand record of a 17-month high. The service provider segment, while it showed recovery compared to the previous month, on a YoY basis, registered a 7% decline in demand. On similar lines, BFSI and technology & communications verticals continue to show a declining demand trend on a YoY basis.

April 2023 update

The demand for IT services in India further shrunk by 17% in April, reaching a 16-month low, and declined by 29% on a year-on-year basis. The impact of the anticipated global economic slowdown is clearly visible in the latest demand trends.

The declining trend is consistent across both tier-1 and tier-2/3 cities. Among tier-1 cities, Chennai, followed by Delhi-NCR, witnessed the highest decline. Tier-2 cities saw an even higher decline on a year-on-year basis at 32%. At this point, the demand for IT services talent in India is almost 50% of the demand in January 2022. However, this trend needs to be observed over a slightly longer period. If this trend continues for a few more months, the already reduced attrition numbers are likely to come down further.

Being the first month of the new fiscal year for many leading India-heritage service providers, this indicates a not so good start to the year 2023-24, and declining talent demand is deeply correlated to reduced business growth.

March 2023 update

After five consecutive months of demand growth/stability, the demand for IT services in India dropped significantly (21%) in March and by 36% on a year-on-year basis. The declining trend in March was consistent across all tier-1 cities, though Mumbai witnessed the lowest decline among all tier-1 cities.

The demand in tier-2/3 cities also reduced by 26% on a year-on-year basis. This overall declining trend is expected as Q1 2022 witnessed a significantly higher demand due to attrition and talent wars faced by the industry, and with the current economic environment, most companies are not in an expansion mode.

Stay tuned for regular monthly updates as we monitor the landscape of the India IT services industry demand market. We’ll continue to provide the latest insights and trends, so you stay well-informed on locations and workforce developments.

Boosting Project Readiness in Technology Talent: A Comprehensive Framework for Developing Project-Ready Workforce | Blog

April 26, 2024

To combat the technology talent shortage and improve project readiness, technology firms are investing in comprehensive initiatives across the talent management value chain, including learning and development platforms, niche partnerships, and other strategies. Explore how Everest Group’s 3A framework can help firms assess, acquire, and activate project-ready talent at scale. Reach out to speak with us further on this topic.

With rapid technological advancements and an acute specialized talent shortage, IT firms increasingly recognize the importance of developing technology talent internally. As a result, they have accelerated developing comprehensive learning and development (L&D) frameworks backed by robust tech-driven learning solutions to upskill/reskill technology talent. These strategic investments are aimed at ensuring future readiness and resilience to technology disruptions.

However, even after these focused L&D investments, organizations still struggle to build a sustainable pool of project-ready resources. According to the Talent Readiness for Next-generation IT Services PEAK Matrix^® Assessment 2023, IT service providers reported the lack of project-ready resources as a critical barrier in building a future-ready workforce.

Recent excessive hiring by technology firms has resulted in large benches with lower-quality talent unprepared to be deployed in client projects. Firms continuously train their benches on emerging and in-demand technologies while optimizing talent-sourcing strategies to improve project readiness, particularly in the entry-level talent pool. However, they still face several key bottlenecks in enhancing the project-readiness quotient, as illustrated below:

Solving the project-readiness puzzle: The 3A framework focused on Assess-Acquire-Activate.

Assess – Effectively assessing project readiness is as critical as embedding it in the L&D journey. Most technology firms lack a dedicated project readiness assessment framework. Developing a robust framework to evaluate and identify gaps in workforce project readiness is crucial.

The framework must be holistic and able to evaluate granular-level details specific to a particular role, project, and service line. It must include all skill types, including technical skills, domain expertise, cognitive and interpersonal skills, and related attributes such as proficiency level and experience.

Additionally, it’s critical to move beyond the conventional metrics of gauging project readiness, such as certifications and skill tags to digital readiness quotient.

“We have invested in an in-house tool designed for conducting technical assessments of trainees. Customized assessments are created in the tool based on the skill matrix, and trainees are evaluated using these assessments to assess their level of upskilling. The assessments include scenario-based and coding questions to evaluate conceptual and hands-on expertise of candidates.” – Leading IT service provider

Acquire – Leading organizations are strategically shifting their focus on developing technology talent at early stages. By adopting a train-hire-deploy talent acquisition model, companies aim to build project-ready pipelines. Here are some initiatives top firms are using to acquire project-ready resources:
- Forming in-depth alliances with academic institutions to focus on building talent from the ground up through tailored learning content, internships, apprenticeships, dedicated courses, or degree programs targeted at industry-relevant and in-demand skills
- Creating pre-onboarding programs with learning content and hands-on practice modules in simulated environments to prepare freshers for a streamlined transition and integration
- Partnering with training firms to acquire specialized talent equipped with niche or next-generation skills

“We have an exclusive job program for individuals looking for full-time jobs after high school, thereby making them financially independent. This is a hybrid training program focusing on the overall education and personality grooming of students to make them job-ready.” – Leading Indian IT service provider

“We currently have seven master’s programs running across six premier institutes in India to channelize the talent generation in the IT industry. We have handstitched the curriculum interventions and provide internship opportunities to students, which eventually leads to conversion to FTE.” – Leading global system integrator

Activate – In addition to traditional learning interventions, firms should promote on-the-job learning opportunities such as peer learning forums, collaboration and knowledge-sharing platforms, and sessions to exchange expertise on niche topics, projects, accounts, and roles.

Further, firms can explore strategic partnerships with specialized technology providers to build and integrate tailored learning exercises into their L&D ecosystem. This may include hands-on projects that mimic real-world scenarios, customized simulated environments, and labs specific to particular use cases or industries.

“We partner with multiple providers of advanced-level technology programs who design and deliver training in boot camps as well as virtual instructor-led training (ILT) mode for training in higher order competencies. They also provide cloud labs along with the program, apart from personalized subject matter expert (SME) guidance. In fiscal year 2023, 33% of our deep-skilled learners were deployed in projects where they could use their new skills” – Leading Indian IT service provider

Following are some examples of the partnerships leveraged:

Future outlook

The sharp decline in the project-readiness quotient of the workforce in recent times and the ever-evolving client expectations have led technology firms to take holistic measures to ensure they have sustainable pipelines of ready-to-deploy talent.

To effectively tackle the issue, firms must continue adopting proactive measures to enhance the project-readiness quotient. These approaches can include comprehensive assessment frameworks, optimized talent sourcing strategies, and establishing a balanced L&D ecosystem.

Firms with robust workforce strategies that strongly emphasize project readiness will be better positioned to build and sustain scalable project-ready pipelines – giving them a competitive edge in the talent crisis.

To gain further insights into how leading service providers are transforming their workforce strategies to extensively focus on enhancing project readiness and technology talent, contact Arpita Dwivedi [email protected], Amit Anand [email protected], and Abhigyan Kumar [email protected].

Watch the webinar, Locations and Workforce Strategy 2024: Insights, Trends, and Key Priorities, for trends shaping 2024’s workforce and locations strategies.

While IT Talent Demand Declined Across India in 2023, the Decline Was Milder in Tier-2/3 (vs. Tier-1) Cities | Market Insights™

April 25, 2024

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Sailing Through Tech Talent Market Turbulence: Optimize and Fortify the Talent Supply Chain for Superior Talent Readiness | Blog

December 15, 2023

Navigating the volatile tech talent market is crucial, but service providers are discovering that finding talent with the needed skillsets is challenging. Read on to discover how leading IT service providers are managing the tech talent turbulence to build a future-ready workforce.

In recent years, the tech talent market has experienced heightened volatility, reflecting the rapidly changing dynamics of the technology landscape. A notable trend during this period has been the record-high attrition rates, especially in niche and specialized roles, indicating a significant turnover of skilled professionals within the industry. Simultaneously, there has been a marked increase in wage inflation, reflecting growing competition for top talent and a scarcity of skilled individuals.

The rapid advancement of technology has created a surge in demand for skilled professionals with expertise in emerging technologies such as artificial intelligence (AI), cybersecurity, cloud computing, and data analytics. However, the supply of qualified talent is struggling to keep pace with this demand, leading to a widening talent demand-supply gap. This gap is further exacerbated by the mismatch between the skills required by employers and the skills possessed by potential employees, demand for industry-specific expertise, geographical imbalances, and the untapped potential of underrepresented groups.

To learn insights into the technology talent market, key trends and emerging skills, and the current landscape, explore this session: Thriving in the Competitive IT Talent Market: Best-in-Class Approaches.

As per Everest Group’s Enterprise Pulse for Technology Services 2023 Report, the percentage of enterprises satisfied with their service partner dropped from 75% to 69%. Twenty-five percent of enterprises remain dissatisfied with the technology and domain expertise of the resource, and 30% express dissatisfaction with their service provider’s talent management capabilities. The key challenges for service providers in building a next-generation ready IT workforce include (listed in order of severity):

Shortage of talent skilled with next-generation IT skills
Long cycles required for upskilling/reskilling
Low project readiness quotient for next-generation IT skills
Difficult to integrate alternate talent (gig workers and non-STEM talent) pools in the workforce

In the face of these challenges, the call for talent readiness emerges as a strategic imperative for service providers aiming not just to survive but to thrive in the competitive tech talent market. Talent readiness encompasses more than the ability to recruit; it involves proactive measures to upskill existing employees, anticipate emerging skill requirements, and foster a culture of continuous learning and adaptability.

To assess the talent readiness of IT service providers, we recently launched the Talent Readiness for Next-generation IT Services PEAK Matrix® Assessment 2023. In this PEAK report, we have assessed 26 IT service providers’ workforce management and development practices and their ability to consistently provide quality and hyperproductive talent for next-generation IT services to the client.

In this blog, we’ll delve into the findings of the Talent Readiness for Next-generation IT Services PEAK Matrix® report and highlight best-in-class talent management and development practices adopted by service providers to stay ahead.

In response to the evolving demands of the tech talent market, service providers have demonstrated a proactive approach by making substantial investments to optimize and future-proof their talent supply chain.

Service providers are adopting non-conventional channels and geography-specific strategies and strengthening ties with institutions to acquire talent

Service providers are increasingly adopting innovative approaches to attract and acquire candidates with next-generation skill sets. Embracing non-conventional channels, such as hackathons and case competitions, has become important to identify and engage top talent in a competitive market. Strengthening ties with educational institutions, advocating for close collaboration with academia to align curriculum with market trends, and ensuring that graduates possess the skills in demand will be paramount to shaping the next generation of the tech talent market. Additionally, there is a growing focus on apprenticeship-based hiring, helping service providers with project-ready candidates. For example, one of the leading IT service providers has reported that apprenticeship hires constitute 20% of its entry-level hiring in North America. Furthermore, service providers are tailoring their strategies to specific geographical regions, recognizing the diverse skill landscapes across the globe.

Service providers are adopting a data and AI-driven approach to drive precision in skilling, building personalized career programs and learning pathways, and focusing on experiential learning

As per the Talent Readiness for Next-generation IT Services PEAK Matrix® report, more than 50% of the service providers mentioned that strengthening the learning and development ecosystem remains their top strategic priority.

Leaders are weighing high on experiential learning, embedding Hackathon, Codeathon, and capstone projects in the learning journey, which will involve the implementation of real business use cases within deadlines, provide the experience to work as a team, and enhance project readiness of the employee. Organizations are leveraging data and AI-based solutions to assess skill gaps and build personalized career and learning pathways to align individual aspirations with broader organizational goals.

To make the learning experience more engaging, gamification and social learning are being embedded into training programs. This not only adds an element of fun but also stimulates healthy competition, motivating employees to actively participate and excel in their learning journeys.

Leading IT service providers are tracking a robust set of key performance indicators (KPIs) to gauge the effectiveness and impact of learning initiatives,

These metrics include tracking learning hours per employee, the number of employees advancing to higher roles post-upskilling, and cross-skilling efforts. Internal mobility is closely monitored to evaluate workforce adaptability, while an employee quotient measures overall competency and deployment. Organizations also assess success by tracking the number of niche skills acquired annually, ensuring they stay abreast of industry trends. Financial considerations, such as spending per employee per year on learning, provide insights into the alignment of investments with skill enhancement and organizational growth. These comprehensive KPIs collectively offer a 360-degree perspective, guiding organizations in refining and innovating their talent development strategies.

Service providers are taking a holistic approach and leveraging technology to build a more engaged and motivated workforce

According to the Talent Readiness for Next-generation IT Services 2023 report, 22% of the service providers mentioned enhancing employee engagement as their top strategic priority.

In the contemporary workplace landscape, there is an increasingly pressing need for robust employee engagement strategies that prioritize various dimensions of employee well-being. This holistic approach encompasses the physical, mental, financial, and social aspects of an employee’s life.

Leaders have either built or are leveraging third-party AI-based tools to capture employee sentiments, employing advanced sentiment analysis techniques to interpret emotions expressed in various communication channels, including emails, chat logs, and surveys. This continuous tracking and analysis provide organizations with real-time insights into employee morale, satisfaction, and engagement levels. By identifying potential issues such as stress, burnout, or disengagement early on, providers are able to make informed decisions and implement targeted interventions to enhance overall employee well-being and cultivate a positive work environment.

One leading IT service provider utilized AI-based employee engagement solutions, employing a personalized chatbot to conduct pulse and ad hoc surveys and address grievances, thereby performing real-time sentiment analysis and calculating a happiness score in real time.

Beyond internal initiatives, providers are increasingly partnering with technology providers, offering platforms and solutions that can support their talent management efforts. These platforms typically leverage next-generation technologies such as AI and data analytics to enable internal talent mobility, career-pathing, and learning management.

As the pace of technology continues to accelerate, talent is going to be a critical differentiator for providers. To further discuss how you can better prepare your organization, contact [email protected], [email protected], and [email protected]

To learn more about the current IT talent market landscape, check out our session on: Thriving in the Competitive IT Talent Market: Best-in-Class Approaches.

Declining Headcount at Major IT Service Providers: Are Macroeconomic Factors the Sole Reason for the Tech Hiring Slowdown? | Blog

December 15, 2023

From increased hiring growth after the pandemic to recent layoffs, the tech talent market has experienced great volatility. Recognizing the need for a more sustainable approach, top employers have increasingly focused on building and developing talent internally. In this blog, we examine the major factors contributing to declining tech hiring and the outlook for IT services talent.

Reach out to us to discuss further.

The demand for IT tech talent has fluctuated widely in recent years, moving from a post-COVID hiring surge as enterprises accelerated digital transformation to the challenging Great Resignation, marked by record-high attrition rates and wage inflation.

IT service providers grappled with the dual challenge of retaining skilled professionals and attracting new talent. Now, the pendulum has swung the other way, with organizations implementing rounds of layoffs, imposing hiring freezes, and reducing overall headcount.

This rapid shift underscores the dynamic nature of the tech talent market and the evolving challenges both employers and professionals in this field face. The exhibit below shows the cumulative downward trend in headcount for major IT service providers.

Over the past five quarters, from the second quarter of FY23 to FY24, 56,000 positions were eliminated, translating to an overall 3.26% headcount reduction for this period. This decline contrasts with the significant headcount growth in FY22 and the first half of FY23.

Let’s examine the following major trends contributing to this downward trend and take a look at the talent outlook in the IT services industry:

A tectonic shift from hiring to building and developing talent internally

According to Talent Readiness for Next-generation IT Services PEAK Matrix^® Assessment 2023, the strategic priority for the majority of service providers for the next 12 to 18 months from a talent perspective is learning and development. Employers are focusing more on providing best-in-class opportunities for internal talent to upskill/reskill. This effort is backed by implementing structured frameworks to accelerate career progression through internal movement within the firm, aligned with the associates’ aspirations and business requirements.

Consequently, service providers have made significant investments to drive these efforts, including Artificial Intelligence (AI)-based internal talent marketplaces, AI-enabled skill profile matching platforms, personalized skilling recommendations based on an associate’s skill profile, roles, and projects, among others.

The combined result of quality upskilling initiatives and robust internal movement frameworks is that service providers can fulfill a substantial portion of niche talent requirements with specialized skills from their internal talent pool.

One leading service provider reported it has filled 60,000 open positions through upskilled and cross-skilled employees. Additionally, internal mobility also offers multiple other professional benefits, including higher retention rates, lower employee costs, and enhanced succession planning, to name a few

Strategic pivot from external hiring to optimal resource utilization

Service providers are focusing on increased internal workforce utilization and optimizing resource allocation to projects. This is evident from the increased utilization rate most service providers have reported in the last few quarters.

Some notable examples include Infosys, where the bench utilization rate increased from 76.6% in the second quarter of FY23 to 80.4% in the same period this year, and Wipro’s bench utilization rate increased from 79.8% to 84.5% during the same period. Additionally, TCS, HCLTech, LTIMindtree, Tech Mahindra, and Persistent Systems also indicated higher bench utilization rates

Hiring recalibration amid shifting dynamics in enterprise client demands

Due to the ramped-up digital transformation initiatives of enterprise clients during FY22 and the first half of FY23, most service providers ramped up hiring, resulting in significant net new additions to meet the surge in demand.

With the current demand slowing, service providers are focusing on upskilling and rotating already-hired resources. They are cautiously approaching hiring, delaying onboarding, and planning to forego hiring recent college graduates for the current year

Service providers navigate margin compression, opt for prudent cost management

Even with the headcount reductions, employee costs are at an all-time high for most of the top service providers. As illustrated in the exhibit below, employee costs have grown faster than revenues in the last few quarters, adversely affecting margins

Apart from this, multiple other factors are affecting margins, including service providers’ back-to-office initiatives. To counter these effects, service providers are focusing on the current internal workforce and significantly ramping down net new additions to lower overall recruitment and onboarding costs.

Macroeconomic headwinds impact demand drivers in the IT services industry

Current global macroeconomic conditions are significantly contributing to the downward trend. The IT and business process services industry is expected to grow at a slower 2.7-3.2% in year-over-year organic constant currency terms (base case), a deceleration from the 4-6% growth in the last 12 months.

The global economic slowdown, supply chain disruptions, elevated inflation, geopolitical instabilities, wars, and oil conflicts, among other factors, are driving this decline and contributing to a negative outlook.

Hence, enterprises feel obligated to decelerate the pace of transformation initiatives and focus on cost optimization. This leaves the services industry dealing with challenges such as project cancellations, delayed ramp-ups, tougher negotiations, pricing wars, settling for new deals with lower margin profiles, a lack of long-term client commitments, and so on

Tech talent outlook

Over the past few years, service providers have come to a crucial realization that merely relying on external talent acquisition to match enterprise demand is not enough.

Recognizing the need for a more sustainable approach, they have increasingly focused on building and developing talent internally. This shift has given rise to the need to strengthen internal talent development processes.

Consequently, service providers have now started reaping the rewards, efficiently managing a substantial demand volume by leveraging their internal workforce. The benefits extend beyond the organizations themselves, positively impacting employees through enhanced career growth opportunities, skill development, and a sense of loyalty fostered by internal mobility programs.

To gain further insights into how leading IT service providers are tailoring internal talent development and management strategies to drive optimal workforce utilization, manage associate aspirations, and efficiently meet client needs, reach out to Arpita Dwivedi [email protected], Amit Anand [email protected], and Abhigyan Kumar [email protected].

Key Issues 2024: Creating Accelerated Value in a Dynamic World | Webinar

December 12, 2023

ON-DEMAND WEBINAR

Key Issues 2024: Creating Accelerated Value in a Dynamic World

WATCH THE WEBINAR ON-DEMAND

In an era of ceaseless change, ever-evolving market dynamics, and an unrelenting demand for progress, the traditional pace of value creation is no longer enough. Creating accelerated value has become paramount for business leaders.

How do you achieve accelerated value? Enterprises must embrace innovation while effectively managing change. This approach will help businesses navigate rapid transformation while ensuring stability and sustainability.

Watch this webinar to gain valuable insights into the current perspectives of IT-BP industry leaders.

We discussed the major concerns, expectations, and trends for 2024 and provided recommendations on how to drive accelerated value from global services – helping position organizations to plan and align goals and succeed in 2024.

What questions has the webinar answered for the participants?

What are the key challenges and priorities and the outlook for global services in 2024?
What are the likely changes in sourcing spend, sourcing strategy (in-house vs. outsource), and locations?
Which digital services and next-generation capabilities are expected to be in demand?
How will generative AI impact the global services industry?
How are outsourcing deals, enterprises’ leverage of service providers, and bill rates expected to change?

Who should attend?

CIOs, CDOs, CTOs, CFOs, CPOs
Service providers
GBS / Shared services center heads
Global services leaders
Locations heads

Hrishi Agarwalla

Vice President

Bhanushee Malhotra

Practice Director

Alisha Mittal

Vice President

Rajesh Ranjan

Partner

Trends Shaping the Talent Market in 2024: How Enterprises Can Create a Competitive Edge | Webinar

October 31, 2023

ON-DEMAND WEBINAR

Trends Shaping the Talent Market in 2024: How Enterprises Can Create a Competitive Edge

WATCH THE WEBINAR ON-DEMAND

Talent dynamics are an ever-changing phenomenon with varying demand-supply, the emergence of new technologies, and changing work cultures. However, enterprises can stay competitive in the talent market by harnessing value from the tech-powered revolution, including generative AI, the maturity of hybrid work models, the reshaping of employability through skills, and the prioritization of sustainability.

Watch this webinar as our expert analysts discuss trends likely to shape the talent market in 2024. The speakers will answer critical questions about the current state of the talent crisis and provide valuable insights and strategies to help organizations thrive in an environment where talent remains a pivotal factor for success.

What questions did the webinar answer for the participants?

Which demand segments will likely continue to face talent challenges in 2024, and how will the challenges impact organizations’ growth and innovation?
How is generative AI likely to shape the dynamics of talent demand and supply in 2024?
What roadmap should organizations follow to stay competitive and harness the latest tools and technologies to future-proof talent strategies?

Who should attend?

CIOs and CTOs
IT heads
Technical leaders
Technical recruiters
HR partners at tech firms

Rohitashwa Aggarwal

Partner

Mihir Bade

Senior Analyst

Aamir Khan

Senior Analyst

The Shifting Landscape of Tech Talent: Challenges and Prospects in Ireland | Blog

August 25, 2023

Ireland’s allure as a top destination for tech talent is fading. This mature delivery hub for nearshore IT services still has much to offer but will have to overcome key obstacles to regain its appeal among international technology professionals. Gain market insights and forecasts for Ireland’s tech talent in this blog. To discuss this topic further, contact us.

In recent years, Ireland has been a magnet for job seekers worldwide, luring talent from diverse nations such as England, India, Brazil, the United Arab Emirates, Turkey, Sri Lanka, and Bangladesh. The country’s appeal as a destination has been fueled by abundant job opportunities, excellent quality of life, simplified work permit processes, and enticing government initiatives such as the Critical Skills Employment Permit and the Start-up Entrepreneur Programme (STEP). However, against the backdrop of a tech sector slump and a demand-supply disparity, Ireland is gradually losing its allure for foreign technology professionals.

Ireland has been a popular location for global companies looking to offer IT service delivery to nearshore Europe. Ireland’s diverse offerings encompass application development, infrastructure management, and other digital services. The nation’s strong talent proposition is underscored by 52,000 tertiary graduates and a thriving information technology and business processes (IT-BP) workforce, totaling 157,000 employees. The cities of Dublin, Cork, and Galway serve as prominent IT-BP hubs, contributing about 80% of the nation’s center setups, with global business services (GBS) making up the majority share at 75% of the total center setups.

While Ireland has been a preferred choice for job seekers, its appeal is waning among overseas technology talent due to various reasons. A surge in remote work options, prompted by the post-COVID era, has opened up alternate global work setups. Concurrently, factors like high living costs, housing constraints, a technology workforce demand-supply gap, and muted global tech sector growth contribute to this trend’s acceleration. Additionally, metro areas like Dublin confront issues with a dearth of international schools and high-income tax rates. Government efforts to alleviate these concerns are geared towards improving living standards through sustainable pay increases.

While programs such as Ireland’s Critical Skills Employment Permit and STEP are designed to attract and retain foreign talent. However, the acceptance and success of remote work have reshaped the scenario, making local talent shortages a thing of the past. Technology companies are tapping into the global talent pool through remote hiring, sidestepping relocation challenges.

These growth-related challenges are reflected in our ongoing tracking of IT job demand in Ireland through Talent Genius™, an interactive platform for insights into IT and business process services decisions. The talent demand for IT services has seen a relative reduction since January 2022, as illustrated below. This decline was most pronounced in the last quarter of 2022, driven by tech sector contraction, economic uncertainty, and job cuts. Although some signs of recovery appeared mid-year, the market dynamics have shifted from employee-led to employer-driven, reflecting cautious hiring practices.

Monthly tech talent demand (job postings) for IT services (indexed to January 2022)

January 2022 = 100

Ireland boasts an operating cost advantage of 20-25% over London for IT application development and maintenance (IT-ADM) services. Nonetheless, tech salaries have remained steady in the first quarter of 2023 compared to the fourth quarter of 2022, reflecting a competitive yet inflexible market due to talent oversupply. Layoffs and conservative hiring practices have suppressed salary competitiveness. But as the market stabilizes, salary stickiness is expected to improve.

As global dynamics shift, Ireland’s position as a tech talent magnet has encountered new hurdles, and the inflow of international tech talent to Ireland is likely to decline in the short term. Nevertheless, with an upward trend in job numbers and signs of a tech sector revival, the second half of 2023 will hold pivotal insights into the future of Ireland’s technology workforce. Addressing challenges related to remote work, housing, taxation, and competitiveness is crucial to regain its appeal as a tech employment destination.

Be on the lookout for more talent information on other nations by clicking on our interactive platform, Talent Genius^™. Connect with Sakshi Garg or Aarushi Raj to discuss the latest trends in tech talent.

Latin America’s IT Talent Battle: Costa Rica Leads the Way, Mexico Booms, Brazil and Colombia Challenged | Market Insights™

August 18, 2023

Latin America’s IT Talent

REQUEST A TALENT GENIUS™ DEMO

Top Employers for Tech Talent™ ─ Understanding Brand Perception from the Perspective of Tech Employees in India, the US, and the UK | Blog

August 2, 2023

In today’s competitive talent market, presenting a compelling brand image is critical to attracting and retaining the best tech talent. This blog presents the top tech employers in three markets based on employees’ brand perceptions of more than 400 organizations as well as other key findings from Everest Group’s research.

Download the report

Brand perception matters

Attracting and retaining top tech talent has grown increasingly difficult in recent years due to the impact of new work models during the pandemic, rapid technological advancements, and fiercer competition. These disruptions have played a significant role in shaping employees’ expectations, providing candidates with a wider array of options in selecting employers and job opportunities that align with their preferences.

Having employees with niche skillsets and expertise is increasingly critical to sustaining a competitive edge. A recent Everest Group survey found that 34% of respondents struggle to find quality tech talent, emphasizing that the battle for tech talent is still far from over and underscores the need for organizations to differentiate themselves.

Employer brand perception – or how current and potential employees view the organization’s brand – is one of the most critical factors in attracting talent. For employees and candidates, perception is reality.

In today’s digital era, employees can easily research and collect information on a company’s culture, reputation, policies and practices, and values. Online platforms such as Glassdoor and Indeed, social media, and various forums allow employees to access reviews, ratings, and feedback.

Based on these insights, employees develop their perceptions of an organization – but the potential issue is that these views can differ from the image the organization wants to project. Let’s look at research that helps to better understand this dichotomy.

Introducing Everest Group Top Employers for Tech Talent™ Report

While most organizations regularly collect internal feedback from employees, they can be blindsided by the perception of their brand from an outside-in perspective.

Everest Group Top Employer for Tech Talent™ report is designed to draw on publicly available information and the latest feedback capturing prospective employees’ perceptions about the organization’s reputation as a tech employer.

The report analyzed 400-plus organizations across India, the US, and the UK for their employer brand perception rating as a tech employer in the respective markets.

The study examined brand perception across dimensions such as compensation and benefits, career progression, senior management, work-life balance, culture and values, and diversity and inclusion. It also evaluated the performance of the tech employers in local talent markets, spotlighting attrition rates, joiner-exit ratio, and overall employee satisfaction ratings.

Insights from the report

The analysis of the outside-in perspective revealed fascinating insights into employee expectations. Tech employers need to watch the trends in employee sentiments to maintain a positive brand perception. Here are some takeaways:

Employer brand perception is dynamic and fluctuates over time. Job seekers are constantly evaluating employers who must be watchful of changing brand perception
Employee expectations constantly change, and approaches that previously worked may not be relevant now
Maintaining the status as a top employer is a monumental feat that requires an ongoing process of creating and maintaining a superior employee value proposition
Systematic local talent market differences play a critical role in determining employer brand perception. Employees in India, for example, assign varying degrees of importance to different components of employee value proposition compared to counterparts in the US and the UK
Perceived brand perception strongly influences and correlates with success in the talent markets for tech employers

Learnings from Top Employers: Shell and SAP

To better understand what makes the leading employers stand out, Everest Group hosted a webinar featuring two companies viewed as top employers for tech talent across all three analyzed geographies.

Jimit Arora, Partner at Everest Group, and Mihir Bade, Senior Analyst at Everest Group, discuss with Brandi Khouri, Vice President of Human Resources at Shell, and Shweta Mohanty, Head of Human Resources at SAP, the secret sauce behind their successes.

During the webinar, Shell highlights that the challenge to develop energy solutions of today and tomorrow, collaboration with experienced and high-caliber colleagues, the opportunity to create a direct impact, and a value-led environment are the keys to their success as an employer of choice.

For leading technology organization, SAP, connecting employees with its purpose and culture creates the difference. The core element of co-creation is well reflected in SAP’s employee value proposition of “we build breakthroughs together.”

To learn the details of these successes, view the webinar, 2023 Top Employers for Tech Talent: Create a Powerful Employer Value Proposition.

Enterprise and CIO leaders are invited to request a complimentary copy of the Top Employers for Tech Talent™ report providing an overview of their organization’s outside-in perception and a benchmark comparison with industry peers.