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Hiring may slow down soon as Russia crisis, rising rates bite

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The Economic Times
24th May, 2022 00:24 IST

The job market frenzy of the last few months is likely to see some tapering off in the coming quarters - partly because of a natural cooling-off process, as well as factors such as inflationary pressures, the continuing Russia-Ukraine conflict and rising interest rates.

Leading recruitment firms and HR experts said the second half of the calendar year may see a 10-20% slowing down from current levels across replacement hiring as well as new job creation, with companies pulling back on astronomical hikes and counteroffers that have become par for the course in recent times.

"What has been happening in the job market for the past few months is not sustainable - the crazy attrition, salary offers will slow down," said Shiv Agrawal, managing director of ABC Consultants. "It could be the beginning of the end of the 'Great Resignation'."

While job activity is still extremely bullish with mandates coming in across sectors, led by tech/IT/digital, experts said some correction may start happening in the next few months.

The impact is already being felt in the startup sector that has seen more than 3,500 layoffs in 2022 amid a funding slowdown. "The startup world was absorbing a lot of talent; if that's going to slow down, it may have a knockdown effect on others," Agrawal said.

"Also, when attrition starts coming down, so will the replacement hiring market, which typically accounts for nearly 70-80% of mandates."

He anticipates a 15-20% slowing down by the year-end.

Guruprasad Srinivasan, group chief executive of Quess Corp, said, "At the moment, we are sitting on a 30% growth in open mandates compared to same time last year. But by October-December, we see demand slowing down a bit by 15% from these levels as cost pressures come in."

Inflationary pressures and the ongoing Russia-Ukraine war will play their part and a lot depends on how interest rates pan out in the coming months, he said. Alok Kumar, senior director at ManpowerGroup India, said, "We've started seeing job losses in startups; some new listings have not taken off as expected. This is a sentiment-driven market. Sectors like IT product, tech will grow but some others may see some slowing down."

Recruitment experts said the cooling down, when it happens, will be felt first in consumer-driven sectors such as FMCG/FMCD/retail/hospitality, as well as manufacturing, auto, construction, etc.

CIEL HR chief executive Aditya Narayan Mishra said some investments may get delayed if lending rates go up further, leading to a 5-10% dip in job market activity by July-September.

Santrupt Misra, global director for HR at Aditya Birla Group, said hiring will continue in firms that have already made investment decisions. "Where investment expenditure hasn't happened already, those people may hold back," he said.

"Overall, when it comes to hikes, etc., some sanity will prevail in the job market," Misra said.

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