IT job hiring subdued: What it signals & Emkay Global's top IT stock picks

Emkay Global in its latest note on IT sector said lateral hiring in IT services is likely to remain subdued and need-based in the near term. A meaningful pickup in hiring is likely only if there is a sustained rebound in global tech demand, improved macroeconomic conditions, and a revival in discretionary technology spending — factors that currently lack clear visibility.

Discretionary tech spending remains weak, and this will likely weigh on revenue growth in Q1FY26, the domestic brokerage noted.

“Current deal activity is primarily being driven by vendor consolidation and cost-cutting initiatives. Meanwhile, the risk of a US economic slowdown in H2CY25 looms large, potentially delaying both client decision-making and recovery in hiring and revenue,” Emkay Global said.

Emkay Global highlighted that headcount additions in Q4FY25 were mixed and cautious, as companies focused on increasing utilisation, controlling costs, and boosting productivity.

“FY25 marked the beginning of a recovery in IT hiring after a sharp pullback in FY24. However, the approach remains cautious. Companies are optimistic about long-term tech demand but remain prudent due to ongoing global and client-side uncertainties,” Emkay said.

Naukri JobSpeak index's IT services segment saw a decline of 4.8 per cent YoY and 3.2 per cent MoM, indicating continued pause in IT index momentum. It also marks a YoY decline in three of the last five months, Emkay Global said.

Across large-cap IT companies, management commentary suggests a continued emphasis on fresher hiring to reshape the talent pyramid and manage costs effectively. For FY26, TCS, Infosys, and Wipro plan to onboard 40,000, 20,000, and 10,000–12,000 freshers, respectively.

Despite this, Emkay noted, “There has been no significant improvement or deterioration in the demand environment in recent months. FY26 is expected to start on a subdued note, as clients continue to be cautious with tech budgets, especially for discretionary projects.”

The firm also pointed out that rising concerns over a potential U.S. slowdown and tariff-related uncertainty are dampening the IT spending outlook, potentially delaying a broad-based recovery in client investments.

While there are some positive signs in the BFSI sector—particularly in areas like digital banking and regulatory tech—demand from manufacturing (especially auto), retail, and logistics remains under pressure.

Over the past month, the Nifty IT index rose 3.3 per cent, outperforming the broader market by 1.7 per cent on hopes of easing tariffs. However, the index has declined 0.7 per cent over the last 3 months and 14.9 per cent over 6 months, underperforming the broader market by 12.4 per cent and 16.7 per cent, respectively.

Among large-cap IT stocks, Emkay Global’s top picks, in order of preference, are Infosys, TCS, Tech Mahindra, LTIMindtree, HCL Tech, and Wipro.