The Indian IT services Big Four, comprising Tata Consultancy Services (TCS), Infosys, HCLTech and Wipro, reported a decline in workforce by 21, 213 in the second quarter, mainly driven by a slowdown in hiring, focus on better utilisation, and use of the existing pool of trained freshers on projects, amid rising uncertainty on the demand front.
With the exception of HCLTech, which saw a plunge of 2,299 employees, the other three recorded the steepest decline in headcount in the range of over 5,000 in the September quarter.
As of the first half of FY24, all four companies cumulatively lost around 39,000 employees. This is a significant drop in headcount, compared to the first half of last fiscal, when these companies together added 81,650 people.
Among the other top Indian IT companies, LTIMindtree was an exception this quarter with the addition of around 794 employees in Q2 and the onboarding of 1,400 freshers.
Attrition rates meanwhile declined sequentially across the board, coming in the range of 14-16 percent. IT companies are trying to avoid backfilling this attrition immediately, as improving utilisation of the existing workforce continues to be a key lever to improve operating margins in the current business environment.
What do these companies say?
According to TCS Chief Human Resource Officer Milind Lakkad, the IT major has been heavily investing in getting fresh talent for nearly 18 months, and right now that is paying off. As the company is recalibrating hiring while the attrition rates have continued to drop, there appears to be a net reduction, he explained during the company’s Q2 earnings conference with analysts.
He expects the headcount shrinkage to continue in the coming quarters, though the numbers won’t be this high.
Wipro’s Chief Operating Officer Amit Choudhary said that his company is focusing on operational efficiency as its utilisation went up by almost 470 basis points in the last four quarters, touching 84.5 percent in Q2.
“We have taken several actions here from sustained bench reduction efforts, and pyramid optimisation to onshore-offshore rationalisation and rigour around subcontracting costs. We are also keeping a very close eye on discretionary spending with increased rigor on cost and efficiency management,” he said.
Infosys Chief Financial Officer Nilanjan Roy said that the company hired ahead of demand, and with this theme of improving utilisation playing out, there’s more headroom to work on.
Infosys still has a significant fresher bench waiting to be onboarded. Consequently, the company will not be hitting the campuses this year. “At the moment, we are not going to the campuses. We will monitor this every quarter, looking at our future predictions and then finally decide when we do go back,” Roy said.
HCLTech, too, is shying away from 1fresh hiring for now, though it is on track in terms of its fresher addition targets, which is helping improve profitability, Chief Executive Officer C Vijayakumar said. “Our investments over the last few years on freshers have really started showing results, and that's visible in this quarter's profitability numbers.”
He added that a lot of freshers they hired over the last 18 months are now trained and deployed on projects in the last quarter. Hence, much of the attrition backfilling is happening by internally deploying these trained freshers, which will not reflect in net headcount numbers.
Fresher hiring targets
While Infosys and Wipro are skipping campus hiring this fiscal year, TCS and HCLTech continue to onboard freshers.
TCS plans to hire 40,000 freshers in FY24 and HCLTech will be adding 10,000 freshers. HCLTech, as of the first half of FY24, has hired about 5,200 freshers. TCS, however, has not shared these numbers on a quarterly basis this year.
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