Bengaluru: Contrary to predictions of headhunters earlier this year, lateral hiring has been a non-starter in FY 2014. Flat to negative demand for lateral hires by IT services firms in the January-March 2013 quarter, which headhunters expected to be buoyant from Q1 (April-June) and to peak in Q2 (July-September) of FY 2014, has not turned out as expected.
“Typically in Q2, IT firms make the most number of offer rollouts to laterals with 3-7 years of experience. However, compared to Q1, IT hiring has seen a dip by about 6 per cent in Q2 ending September 30th” said Thammaiah B N, Director - IT Resources, of staffing firm, Kelly Services India.
“IT firms are making sure that they hire the right candidate at the right cost and have increased the number of interview rounds to shortlist the right candidate. Currently, each lateral hire has to go through 6 rounds of interviews as against the earlier 3-4 interviews that were conducted” he added.
Usually hiring requirements are intimated to headhunters at least three months in advance which allows them to estimate the hiring outlook for the current quarter.
Net hiring in Q2 is down by 10 per cent compared to the previous quarter and 20 per cent down over the same period last year, says Kris Lakshmikanth, CEO, Head Hunters India.
Concurring with Kris, B S Murthy, CEO of executive search firm, Leadership Capital pointed out that lateral hiring in Q2 FY 2014 is the lowest in the last three years. “While positions in Applications Development and Maintenance, Tech support, IMS, Testing,  Product support, ERP and CRM, constituting 60-70 per cent of lateral talent in the top five IT services firms; are being filled up, the just-in-time hiring model adopted by most IT firms has resulted in postponing hiring till candidates are required for new projects and deals” he said.
Demand for pre-sales & sales staff goes up The uncertain business environment in the US, UK and other international markets are compelling IT services firms to not only cut down on campus hiring by 50-60 per cent this year but also ramp up their pre-sales and sales staff to attract and bring in new business.
Hiring is very demand-focused in Q2, said Aditya Narayan Mishra, President Staffing, Randstad India Ltd. “There is a 10 per cent increase in demand for pre-sales and sales staff as well as for domain-specific functional consultants in Q2 over the same period the previous year, as IT firms get aggressive in winning new business and pursuing new deals.
Replacement hiring at the mid and primary levels will continue as usual with demand for project leads, tech leads and team leads. Moreover, this year will witness a boost in internal promotions as IT services firms will promote internal candidates to fill in existing vacancies instead of hiring expensive laterals from outside.
This will help to reduce cost of hiring and also serve as a retention measure” he said.Lateral hiring to pick up steam in Q3 on the back of deal pipeline The market sentiment over the past three months hasn’t been very positive, with no news of any large outsourcing deals being won in recent times, say industry observers.
“While the immediate market outlook is quite uncertain, we have strong indications from our interactions with the industry that Q3 (Oct-Dec) could buck this trend and we should get some good hiring numbers in. There are deals lined up in the pipeline and continuation of the current positive trend in the US market might see some of these deals coming through, resulting in hiring picking up again towards the middle of Q3” said Rajeev Menon, Senior GM MeritTrac Services.