Tech Mahindra bucks industry trend, adds 2,307 employees in Q2

The total headcount for Q2 was 150,604. As of the first half of FY24, Tech Mahindra's total headcount had dropped by 1,796.

IT services firm Tech Mahindra reported a net employee addition of 2,307 sequentially for the quarter ended September 30, bucking the industry-wide trend of slowdown in hiring and revenue guidance amid macroeconomic challenges and demand uncertainties.

The total headcount for Q2 was 150,604. As of the first half of FY24, Tech Mahindra's total headcount had dropped by 1,796.

The attrition rate dropped from 13 percent in Q1 to 11 percent in Q2, continuing the trend of declining attrition rates since the start of fiscal year 2023.

This quarter, all of India's Tier-I IT companies have reported a steep decline in headcount. Tata Consultancy Services (TCS) lost 6,333 employees, Infosys' headcount dropped by 7,530, HCLTech reported a decline of 2,299 employees, and Wipro was down by 5,051. Adjusting for Tech Mahindra's headcount increase, the top five Indian IT companies overall lost 40,744 employees in H1FY24.

During the last quarter, Tech Mahindra's Chief Executive Officer and Managing Director CP Gurnani said that the company was focusing on building generative AI talent. As of Q2, Tech Mahindra had upskilled around 10,000 associates.

Meanwhile, CEO-designate Mohit Joshi, who is set to take over the position in December when Gurnani retires, has reportedly been restructuring and reshuffling duties among the company's senior management over the past couple of months in an effort to enhance sales and consolidate delivery.

In January 2023, speaking to Moneycontrol at the World Economic Forum in Davos, Gurnani said that hiring will be higher when attrition is higher, and net hiring will be low when attrition starts declining.

“Hiring cannot always be linear. The reality is that AI, data, and automation are part of our lives. If it is not linear, revenue goes up. If you don't hire, please do take into account that we are becoming more efficient with automation,” he had said.

Tech Mahindra announced its Q2FY24 earnings on October 25, missing analyst estimates on all counts of consolidated revenue, net profit and EBIT margins. 

Net profit fell 61.6 percent YoY at Rs 494 crore driven by slowing demand in telecom and communications segment and delays in deal cycles.

Consolidated revenue for Q2FY24 declined 2 percent YoY at Rs 12,864 crore, missing Moneycontrol’s estimate of a marginal decline of 0.01 percent YoY coming at Rs 13,127 crore. On a QoQ basis revenue was down by 2.2 percent.

The company's EBIT margin was at an all-time low of 4.7 percent, which is significantly lower than the previous quarter’s 6.8 percent.