HCLTech, Wipro together see headcount plummet by over 11,000 sequentially

TCS is the only one to see a slight uptick in net headcount, adding 523 people during the quarter.

Two of India’s top five Information Technology companies saw their headcount shrink by over 11,000 people during the quarter ended June, a definitive indicator of the struggle IT companies in the country face after the rapid growth of the Covid pandemic years.

While Tata Consultancy Services with its 6.15 lakh-strong workforce added just 523 employees on a net basis, its peers Wipro and HCLTech both saw huge declines in headcount on a sequential basis. Wipro ended the quarter with 8,812 fewer employees from last quarter, while HCLTech saw its headcount fall by 2,506.

Cumulatively, the net addition by the three IT giants, which have all reported their results, stands at -10,795, a far cry from the 31,671 people the three companies added on a net basis in the same quarter last year.

TCS was the only one to see a positive net addition among the companies under consideration. However, it has delayed onboarding scores of lateral recruits having wide experience levels, with Chief Human Resources Officer Milind Lakkad stating this was due to project budgets.

“While we are committed to honouring all the job offers we have made, our focus currently is on leveraging the capacity we had built earlier,” Lakkad told analysts.

The muted net addition also reflects limited demand visibility, implying there is continued uncertainty on the timing of deal ramp-ups, analysts said.

Chief Executive Officer K Krithivasan did emphasise the near-term uncertainty, and said clients are taking a re-look at programmes and pausing them wherever they think the ROI is not strong.

The company’s attrition has continued to trend downwards, coming in at 17.8 percent — a figure the company expects to drop further.

HCLTech, which saw a weaker-than-expected quarter, saw its headcount dip for the first quarter since Q1FY21, ending with 2,506 fewer employees than at the end of the previous quarter. The company’s management attributed this to not backfilling all attrition, and prior fresher additions.

“If you look at the number of freshers we’ve added in the last couple of years, the last two years we’ve been making those investments to add freshers. They go through a cycle of training before they get productive, so that’s also flowing through into our productive capacity. That’s one of the reasons we didn’t go for replacement hires this quarter,” said Chief People Officer Ramachandran Sundararajan.

HCLTech’s attrition has trended downward to 16.3 percent, to pre-pandemic numbers.

Wipro, which has seen a sequential decline for three quarters, has maintained that while some headcount reduction can be attributed to automation related to AI, it is primarily due to the wide bench. In an interview with Moneycontrol, Chief Human Resources Officer Saurabh Govil said that given there are enough people in the organisation, Wipro can use the bench and deploy those it hired last year — and utilisation can be better as well.

Wipro’s onboarding delays for those it hired in 2022 continue, with the company not onboarding any freshers in Q1.

The hiring delays are in line with a precipitous drop in hiring in April and May, with some moderate uptick in June.

According to Xpheno’s active jobs report, the IT sector’s current active open jobs level is the second lowest talent demand level since March 2020. As per the report, active hiring is in a tailspin, as seen during the last three quarters, with minor signs of a sequential recovery last month. On a year-on-year basis, the IT sector’s active demand was 61 percent lower this June as compared to June 2022.

For a sector that is a significant employer, the contribution to overall job openings has been declining as well. As per the Xpheno report, that contribution is at a record low of 34 percent.

A note by ICICI Securities said that based on the commentary and results of Accenture, TCS, HCL, and Wipro, “it is evident that the companies aren’t seeing any immediate demand revival in Q2FY24 and that visibility of recovery in H2FY24 too is limited at this stage.”

This, the note said, could largely be due to multiple low-RoI discretionary projects over the past two years now getting cancelled or seeing rampdowns amid adverse macro conditions. “Lack of visibility around the revival of these projects is dissuading company managements from guiding for strong recovery in H2FY24 in our view, despite decent orderbooking momentum,” it added.