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The COVID Effect : The State of the IT Staffing Industry Amidst The Pandemic

Workforce in India

The staffing industry is all about contract hires. Over the last couple of years, it has found massive fanfare across various industries and sectors. Of the many who invested in flexible IT staffing services, the IT/ITes sector took the summit as their requirements are more project-based.

All seemed fine: more and more companies and businesses turned to IT staffing agencies and BIG things were expected. And then Covid-19 happened which forced employers to review their employment and business plans.

The IT Industry and the Pandemic

India’s IT industry has not been spared. Covid-19 has had a massive toll on the sector, amongst others like BFSI and manufacturing, which have also been deeply affected. India’s IT industry relies on the United States of America and Europe for projects. In fact, two-thirds of the Indian IT industry caters to the aforementioned regions.

These regions have felt the backlash of the pandemic which has resulted in lessening funds spent on IT. This, in turn, has affected the revenues of India’s IT companies. Such has been the detrimental effect of the pandemic on the USD 180 Billion Indian IT sector that experts believe it’s worse than the global financial crisis of 2008.

Given the situation — where projects are getting delayed and costs are increasing — companies offering IT and IT-enabled services in India will have to cut down on their workforce and hire flexi-staff.

What does this mean for IT Flexi-Staffing?

According to Indian Staffing Federation (ISF), the apex body for the flexi-staffing space in India, the Indian IT/ITeS sector alone absorbs 12 out of every 100 flexible employees that are hired across various sectors. Going by that estimate, the ISF also says that the IT flexi-workforce will reach a whopping figure of 7,20,000 by 2021. That’s 2,20,000 more flexi-workers than what they recorded in 2018 which was close to 5,00,000.

Flexi staff is expendable. This is the popular belief that always does the rounds; that they will be the first ones to be let go over others. But experts say that they might actually have an advantage.

Experts and analysts who have their ears close to ground believe that companies will definitely tighten their budgets and optimize overall spend.  And to do this, they will trim the workforce. When the employee release program kicks off, the IT companies will set a criteria of parameters for every employee: contribution, skill, outcome, competency, impact, costs associated and compliance. The client’s requirements, financial health of the company, and specialized skills needed for projects will also come into the picture.

With business slowdowns a natural phenomenon during this time, companies will put more emphasis on outcome-driven engagements and lowering of payouts and compliances. This uncertain environment will favour flexi staff over permanent employees, say the experts. Moreover, employers will be inclined towards variable pay, hiring on need basis, and performance-based payouts over fixed pay. And this, according to industry experts, is good news for flexi staff.

At the same time, they also speculate that since hiring efforts have dialed down, flexi staff will not be able to get the compensation they demand. As IT companies decide to scale their workforce up or down, the flexi staff will be hired as stand-ins, acting more like buffer employees who have to settle for reduced pay in exchange for employment.

And that’s not all. Many IT companies have adopted the wait-and-watch hiring and onboarding strategy during the crisis. As a result of projects getting delayed and clients limiting their IT spend, many IT staffing drives have either been kept on hold or postponed. 

What Next for IT Staffing Firms?

It’s Q2 of the fiscal year and things are definitely looking up from a jobs perspective. With the arrival of the festive season and the removal of lockdowns, IT flexi-staff-dependent markets and sectors such as edutech, e-commerce, finance, and insurance have already started showing signs of recovery which is further expected to boost hiring.

In fact, business in sectors such as e-commerce and ITeS is expected to pick up in the second quarter with e-commerce already hiring or planning to hire personnel ahead of the festive season. As for ITeS, they’re tipped to hire more flexi staff in the second quarter as their clients based out of Europe witness an improvement in their business proceedings.

What’s more, according to a recent employer sentiment survey conducted by OLX People, in the entry-level and blue-collar segments, e-commerce and ITeS are expected to stand head and shoulders above the rest as the biggest employers in the second quarter. And that’s not where the good news ends. The same survey further speculates that 100% of e-commerce and IT companies will be fully operational by October 2020.

Experts believe that perhaps the best thing IT staffing companies can do now is focus exclusively on limited objectives that can have maximum impact in the industry. One such way is to supplement businesses with talent. An IT staffing firm can also come up with various ways to counter downturn in revenues and look into in-possession liquidities that can be used to avert recession blues.

Author Bio:

Digvijay Singh Kanwar is a professional content writer and digital marketing expert and he loves to write about finance and tech based articles. For more details, you can contact him at

[email protected]

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