IT services companies to suspend hiring this year, says Mohandas Pai

India's information technology services industry would see hiring freeze this year and senior level staff taking a 20-25 percent salary cut due to the adverse impact of the COVID-19 pandemic, says IT industry veteran TV Mohandas Pai.

The former Chief Financial Officer of IT services major Infosys said the IT industry has done a "fabulous, unbelievable, and remarkable" job in transitioning more than 90 percent of its employees to work from home.

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It has achieved this task by setting up infrastructure at home, taking permission from their clients, and making sure that "security and oversight are there".

The chairman of private equity fund Aarin Capital and Manipal Global Education said 25 to 30 percent, may be more, of employees of IT companies will always work from home by rotation even after the coronavirus-inflicted lockdown is lifted and the situation returns to normalcy.

Pai said he does not expect the demand for office space in the IT sector to shrink going forward because companies would now need to maintain social distancing in their cramped office space.

"Now, with social distancing, you need more space per person. So, 25 percent working from home will provide additional space. I think space in the offices for people would get bigger; so for the next one year, the market (office space segment) could be very soft, and then it will grow at the normal pace," he said.

On apprehensions in some quarters about job losses and salary cuts, Pai said IT companies would not hire more and they will suspend recruitment, except honouring commitments already made.

"Secondly, if people leave, I don't think they will fill up the backlog, because this quarter and next quarter the market is going to be soft. All the clients are in the West, they have not opened their offices yet, they are still going through the pains. So, I think next year there is going to be recruitment, this year will be soft, they (IT companies) will not grow in (terms of) people," Pai said.

"There will be salary cuts. There will be promotions but not increments in salaries for most people. For senior level they will cut salaries to adjust costs. People getting Rs 75,000 to Rs one lakh and above per month will see salary cuts, may be 20-25 percent," he added.

Pai does not see pay cuts for staff drawing salary less than that.