IT’s Q1 headcount growth likely to stay flat despite improved macro

Headcount growth is expected to be flat in the June quarter as IT services companies remain cautious with short-term hiring, despite recent improvements in sentiment after the pause in tariffs, multiple industry staffing experts said.

After briefly hitting the 80,000 mark in active demand early in 2025, the demand for new joinees had dropped to 55,000 in March-April and continues to remain there, as per staffing firm Xpheno. The current active demand from the IT services cohort is 60,000 openings.

The US had announced high tariffs in early April. It recently paused its 145% tariff on China for 90 days, bringing it down to 30%. Bilateral trade deals are also being worked out with countries like India.

“While conditions on the geoeconomic front have relatively improved since, the job market is yet to bring active demand back to pre-tariff levels,” said Kamal Karanth, cofounder, Xpheno. “Hiring in the IT services cohort has been on a moderated low after Jan – Feb 2025, when it showed signs of recovery and positive growth in demand.”

While overall sentiments are seen improving, reflection of the same in terms of active demand growth is yet to be seen, said Karanth, adding that voluntary attrition and hiring for backfills will balance out leading to flat growth this quarter.

“Although there is long-term optimism, companies remain cautious in the short term, reflecting a careful approach to hiring amid ongoing global uncertainties,” said Neeti Sharma, CEO, Teamlease Digital. “First quarter seems to be flat as the IT services sector continues to face macro-level challenges, with the overall market momentum slower than anticipated .”

IT vendors are focusing on structured, quarterly hiring plans and investing heavily in large-scale AI training programs to build strong internal talent pools, she said. Mid-sized companies are hiring more flexibly, adjusting their recruitment based on specific project wins or delays.

“As trade negotiations progress and market sentiment stabilises, employers appear more confident about workforce planning and future growth,” said Kapil Joshi, CEO, Quess IT Staffing.

In the first quarter, however, the sector is still seeing slow hiring activity and with flat growth, plus-minus a few hundred hires, said Joshi.

About 88% of the current active demand is in the technology and engineering function, Xpheno data showed. The remaining openings are spread across consulting, project management, business development, analysts and other support functions.

There is a larger shift away from mass hiring and towards quality over quantity and leaner, high-skilled workforces, said Joshi.

“Future-ready”, specialised roles in AI, machine learning, cloud, and cybersecurity are projected to see sustained growth, with increases ranging from 30-75% depending on the specific area, as per Teamlease.