Financials to IT: Why India Inc added only 1.8% employees in FY26 despite 9.4% wage hikes

At the same time, estimated salary hikes improved to 9.4%, offering some support to household income and consumption. Jefferies expects stronger revenue growth in FY27 to support hiring, although a weak monsoon and the fading impact of goods and services tax (GST) benefits from October 2026 could weigh on demand. The report also expects discretionary consumption, including automobiles, consumer durables and travel, to outperform broader consumption trends.

The implementation of the 8th Pay Commission, expected in late FY28, could provide another boost to spending through higher government salaries and arrears. 8% in FY26, the weakest rate in five years. The sample included more than 2,200 companies with a combined workforce of 10.4 million employees as of March 2026. The slowdown was not confined to technology companies. Employee growth in companies outside IT fell to 2% in FY26, while private-sector employment growth declined to 2.1%.

Public-sector undertaking (PSU) headcount contracted by 0.4%, although Jefferies described this as the mildest decline in more than a decade. Private companies accounted for nearly all net job creation among the listed companies covered by the study. Yet the number of companies expanding their workforces also fell. Only 54% of listed companies added employees in FY26, down four percentage points from the previous year.

The report's findings point to a broad moderation in formal hiring rather than a slowdown restricted to a single industry. Revenue growth remains an important factor, with companies reporting stronger sales growth generally adding employees at a faster rate. Financial services accounts for the largest share of new jobs However, the sector also drove much of the overall moderation in hiring. Employee-count growth in financial companies fell to 1.7% in FY26, a decline of 2.7 percentage points year-on-year.

The sector had 2.8 million employees as of March 2026, according to Jefferies. The slowdown in financial-sector recruitment stands out because the industry remained the largest source of new jobs despite adding employees at a slower rate. Jefferies' analysis suggests that financial services will remain important to formal employment, but its contribution to incremental hiring has weakened. The report's sectoral data show that healthcare added 37,000 jobs, consumer discretionary companies added 34,400 and industrial companies added 22,900 in FY26.

Information technology contributed 14,400 jobs, while staffing companies added 8,800. Energy companies added 6,600 employees, utilities added 4,000, materials added 2,800 and real estate added 2,200. Staples companies recorded a net reduction of 1,400 jobs, while telecom contributed approximately 900 additional jobs. Employment growth across major sectors SectorNet jobs added in FY26Financials47,900Healthcare37,000Consumer discretionary34,400Industrials22,900Information technology14,400Staffing companies8,800Energy6,600Utilities4,000Materials2,800Real estate2,200Telecom900Staples-1,400Total jobs created195,000 Source: Jefferies, India Equity Strategy report dated October 21, 2026.

Figures are rounded as presented in the report's sectoral contribution chart. Revenue growth remains closely linked to hiring Jefferies found a strong relationship between revenue growth and employee additions among listed companies outside financial services. Companies that recorded revenue growth of more than 20% in FY26 achieved aggregate headcount growth of 9.1%, while 68% of these companies added employees.

Companies with revenue growth of 10% to 20% reported headcount growth of 4.4%, with 61% adding employees. By comparison, only 45% of companies with revenue growth of up to 10% expanded their workforces. Across the broader sample excluding financial services, 54% of companies added employees during FY26. The figures suggest that hiring has become more closely concentrated among businesses with stronger revenue growth, rather than spreading evenly across the listed corporate sector.

Jefferies expects higher revenue growth in FY27 to support employee additions. However, the extent of any recovery will depend on how sales growth develops and whether companies convert that growth into new recruitment. Jio Financial Services, Apollo Hospitals and Eternal lead Nifty 50 hiring Jefferies identified Jio Financial Services, Apollo Hospitals, Eternal, Maruti Suzuki India and Dr. Reddy's Laboratories as the five Nifty 50 companies with the fastest headcount additions in FY26.

Jio Financial Services recorded employee-count growth of 100%, with a workforce of 2,000 as of March 2026. Apollo Hospitals increased its employee count by 49% to 27,700, while Eternal reported growth of 34% with 22,000 employees. Maruti Suzuki's workforce grew by 29% to 25,800, and Dr. Reddy's Laboratories recorded employee growth of 13% to 27,500. These companies stood apart from the broader slowdown in listed-company recruitment.

Their reported additions show that employment growth continued at a strong pace in selected businesses even as aggregate hiring moderated. IT hiring remains weak, while financial-sector recruitment slows The information technology sector continued to face subdued employment growth. Jefferies reported that employee-count growth in listed IT companies was 0.8% in FY26, with the sector employing 1.9 million people as of March 2026.

The report's projections point to a gradual recovery, with IT employee-count growth estimated at 1.7% in FY27 and 2.5% in FY28. These are forecasts rather than reported outcomes, and the projected improvement depends on a recovery in recruitment. The wider employment data also show that the slowdown has spread beyond technology. Employee growth in listed companies outside IT stood at 2% in FY26, compared with 3.3% in FY25.

Financial services experienced a sharper slowdown, with hiring growth dropping to 1.7%. The combined figures suggest that the moderation in formal employment reflects pressure across multiple sectors rather than a problem confined to technology companies. Salary growth improves despite slower employee additions While companies hired fewer employees, salary growth improved. Jefferies estimated salary hikes at 9.4%, and the report put the aggregate employee-cost bill of listed companies at ₹13.5 lakh crore (INR 13.5 trillion) in FY26.

The average employee cost in private listed companies increased to ₹10.9 lakh per employee in FY26, representing growth of approximately 7% during the year. The four-year compound annual growth rate from FY23 to FY26 stood at 8%, compared with 5% during FY16-FY20. For listed PSUs, average employee cost reached ₹25 lakh per employee in FY26, according to the report's chart. The data indicate that salary spending has continued to rise even as workforce additions have slowed.

Jefferies expects the 8th Pay Commission to be implemented in late FY28. Higher government salaries, along with accumulated arrears effective from January 2026, could support discretionary spending when payments reach employees. The report also estimates that the organised-sector wage bill was growing at about 8% in the first quarter of FY27. However, the benefit from GST tax cuts is expected to begin fading from October 2026 onwards, limiting the extent to which tax relief alone can sustain consumption growth.

Discretionary consumption may outperform broader demand Jefferies expects discretionary consumption categories, including automobiles, consumer durables and travel, to perform better than the wider consumption market. The reasoning rests on the combination of wage growth, prospective salary increases and higher revenue growth expected in FY27. These factors could support spending on non-essential goods and services, although the report also identifies a weak monsoon and the fading impact of GST benefits as headwinds.

The expected late-FY28 implementation of the 8th Pay Commission could provide additional support to consumption through higher government salaries and arrears. The timing means that its effect would come later than the near-term recovery expected from corporate revenue growth. Informal employment data show uneven conditions The report also examines indicators outside the direct employee-count data for listed companies.

Contract labour employed by Larsen & Toubro reached a record 378,000 in FY26, up from 354,000 in FY25. Jefferies said the increase indicated that employment linked to capital expenditure remained resilient. Conditions in the staffing industry were weaker. Staffing levels reported by major recruitment companies stood at approximately 1.044 million in March 2026, broadly unchanged from 1.040 million in March 2025.

Jefferies interpreted the flat reading as evidence of weakness in lower-end urban job creation. The report also presents government labour-force data showing a labour-force participation rate of 44.9% and an unemployment rate of 3.1%, described as an eight-year low. It estimates India's working-age population at 993 million and annual labour-supply additions at 7.5 million in calendar year 2026, easing to 6.8 million by 2030.

The figures point to a labour market with different conditions across formal corporate hiring, contract work and recruitment services. Employment linked to infrastructure spending has held up, while staffing levels and organised-sector employee additions have shown weaker momentum. Jefferies sees hiring support from revenue growth, but consumption faces risks Jefferies' central finding is that organised-sector employment growth has weakened even as salary increases have improved.

Financial services accounts for the largest share of incremental jobs, but its hiring rate has fallen sharply. Technology recruitment remains subdued, and only 54% of the listed companies in the study expanded their workforces in FY26. The research expects stronger revenue growth to support hiring in FY27 and sees room for discretionary consumption to outperform broader demand. However, a weak monsoon and the fading impact of GST benefits could constrain the recovery, while the anticipated Pay Commission effect lies further ahead.

The report therefore presents a mixed picture: wage growth and selected sectors continue to support employment and spending, but the breadth of formal job creation has narrowed. Any sustained improvement will depend on stronger business revenue growth translating into wider recruitment, rather than remaining concentrated among a smaller group of companies.