Bangalore: Indian IT Industry is witnessing a fall down in the rate of recruitment, a key indicator of the industry's growth. It is estimated that hiring on an overall basis is down by 40 to 50 percent compared to last year. Hiring across companies, especially the small and mid-sized, has entered into a lull with momentum certainly being downcast, reported The Economic Times.

Recruitment has taken a nasty blow during the last three months. Given the high dependence of the Indian IT industry on the U.S. economy, companies are increasingly taking a cautious route towards hiring.

Amitabh Das, CEO, Vati Consulting, said that the general trend in the marketplace is showing that companies are not being very proactive in their hiring plans.

The Indian IT/ITES industry is expected to employ around two million people by the end of FY08 against 1.6 million in FY07.

The current slowdown is expected to hit badly the ability of the small and mid-tier companies to attract quality talent. Nirupama VG, MD, Ad Astra Consultants, said, "Small and mid-sized companies are not hiring as many people at junior and mid-level as they did earlier. They are, however, hiring at senior levels with quality becoming very stringent." At the same time, companies are increasingly utilizing their bench strength to shore up their active resources, unlike in the past. This, in a way, could have brought down the hiring momentum a bit.

The slowdown pattern in the industry has had its impact on the salary levels. Gautam Sinha, CEO, TVA Infotech, said that compensation hikes are likely to decrease this year especially for those with generic skill sets, but it may not be the case for those with niche capabilities.