The slowdown in the US has impacted campus recruitments in tier-II cities as well. According to representatives from engineering colleges, IT companies are now staying away from the campuses, which has resulted in an over 80 per cent drop in placements.

It is not just the big companies.

Even mid-size and smaller IT companies are going slow on recruitments due to the uncertainty in business from the US, which is the single-largest market for these companies, says L Venkataesan, a placement consultant based in Tiruchy.

JJ College of Engineering in Tiruchy, till before last year, saw almost 95 per cent of its  students being placed. S Parthasarthy, director (placements, JJ College), said between January and September last year, 200 students were selected of which 50 got offer letters.

This year, only two have been selected. Earlier, almost all the top IT companies like Infosys [Get Quote], HCL [Get Quote], Satyam [Get Quote], Cognizant and TCS [Get Quote] visited campuses for offering jobs.

But this year, except Infosys, which recruited just one student, none of the companies turned up, he added.

The slowdown in the recruitment activity has lowered the morale of the students, said Mahadevan, placement officer with SA Engineering College in Tiruverkadu, near Chennai.

About 400 students pass out of this college every year. Last year, 80 per cent of the students were placed. But this year, only 10 per cent of the students had been selected so far.

With the situation unlikely to improve in the near future, institutions are now advising students to join ITeS companies. "It is better to work somewhere instead of sitting idle," said a senior representative of a business school in Chennai. His college did not see even a single company visiting the campus for placements this year.

Meanwhile, Lakshmi Narayanan, vice-chairman, Cognizant Technology Solutions, said the current trend would be temporary.

According to a senior industry representative, the slower hiring this year was a consequence of last year's experience when many IT companies, hit by the weak dollar, had to delay absorbing students whom they had selected in advance.

K Pandia Rajan, MD of Ma Foi Management, had earlier said campus recruitments by IT companies would plummet about 38 per cent this year.

• US sub prime crisis spooks global economy