Headcount at the top companies in India’s information technology sector fell for the fourth consecutive quarter, as they cut down on recruitment at the entry level and were slow in hiring to offset attrition amid an uncertain demand environment in their biggest markets.

The collective headcount of the top eight IT companies fell 17,534 in the quarter ended December 31 compared with the previous three months, according to data compiled by Xpheno, a specialist staffing firm. Compared with a year earlier, the staff count at these companies – Tata Consultancy Services, Infosys, Wipro, HCLTech, LTI Mindtree, L&T Technology Services, Tech Mahindra and Cognizant’s India business – were down by 75,000, the sharpest fall in at least six years.

The collective headcount of this group of eight companies has now dropped to nearly that in early 2022, Xpheno cofounder Kamal Karanth said. As of end December, these companies employed just under 2 million people.

Hiring in India’s IT sector that employs millions of engineers had peaked around 2021 and in early 2022, driven by post-Covid demand for digitisation and cloud transition globally. But the demand has now slowed down, with clients in markets like the US and Europe becoming cautious on discretionary spending amid high interest rates and inflation, and concerns over the Israel-Hamas and Russia-Ukraine conflicts. With the backlog of over hiring in 2021, the slowdown in demand has reflected on their hiring and headcount in the past few quarters.

The net headcount at these companies started falling in the January-March quarter of 2023, when they reduced by 12,455 from the previous three months. The number decreased by 28,387 during the April-June quarter and by 16,624 in the following three months through September, according to data collected by Xpheno.

Meanwhile, according to experts, tables could be turning soon.Recent financial results of most platform vendors and cloud providers have been encouraging, said Yugal Joshi, partner at tech industry research firm Everest Group. “This should help demand and make IT providers hire more. Also, of late there has been an increase in client requests for 100% offshore-centric support for basic roles … leading to more demand for entry level talent,” Joshi said.These companies were very aggressive in hiring before they faced the slowdown in demand, said Joshi. Now, some of them are going slow even on onboarding graduates they had offered to hire during campus placements.

“They are using deferral in joining to protect margin, etc. In some large IT companies, graduates hired in 2022 haven’t yet been onboarded,” said Joshi.