Athira Sethu
Kochi, 22 January 2025
India’s IT sector is likely to grow in 2025 because of increased spending on technology and rising hiring. More deals involving AI, higher spending on software, and a rebound in hiring are likely to propel the sector forward. India’s IT exports are likely to grow despite some uncertainties related to U.S. policies, especially when the U.S. market is improving.
After a very challenging year for the $254 billion software services industry of India, the sector started to recover in the last half of 2024. Stocks in the IT sector did better in the last year than they have done in the past three years. The IT companies were finding it difficult as clients reduced spending due to inflation and other global economic issues. On the other hand, in the first quarter of fiscal 2025, several firms reported improvements by investing in more AI-related technologies. However, the slowdown continues within the broader technology space, but a couple of quarters may pass before it gains complete recovery.
During the second quarter of 2024, IT companies reported some upbeat news, beating expectations. An analysis of 30 tech companies indicated that 13 had double-digit growth, while two had triple-digit growth. However, a few companies showed slower growth or declines in earnings. Experts, however, still believe that the worst of the downturn may be over.
Several major trends are expected to impact the IT and hiring industries in 2025. Spending on AI is rising, and the trend is becoming increasingly automated for recruitment. The use of AI and machine learning by companies simplifies hiring processes, requiring less human interaction. This will help recruiters save a lot of time when screening candidates, scheduling interviews, and sending out offer letters.
The shift to hybrid work is another. Post-pandemic, almost every company around the world adopted flexible work structures. By 2025, flexibility at work shall become a necessary tool rather than an advantage and recruiters will stress the availability of flexible work patterns, work-life balance, and engaging company cultures for the elite candidate.
Also, the emphasis would shift from traditional hiring on grounds of job title and degree obtained, to a skills-based process. Now it places its value on practicable skills that are acquired. This approach therefore opens the windows for candidates, with various backdrops and differing skills.
The well-being of employees is also gaining importance. Since talent shortages are severe in many industries, companies are simply trying to retain their employees by offering wellness programs, support for mental health, and financial planning services. These are going to play a vital role in the workplace culture in 2025.
The gig economy will grow exponentially in 2025. The workers will opt for freelance or contract jobs, which will open new opportunities and problems for employers. Companies will hire gig workers with specialized skills for short-term projects, and that will require powerful planning in regard to workforce management.
