Tech Mahindra’s total headcount down by 6,844 in Q3

Tech Mahindra: Tech Mahindra Q3 profit grows 0.9% QoQ to Rs 1,297 crore, revenue rises 4.6% to Rs 13,735 crore. Operating numbers beat estimates. The IT services company has clocked a 0.9% sequential growth in consolidated profit at Rs 1,297 crore for quarter ended December FY23, with revenue rising 4.6% QoQ to Rs 13,735 crore, beating analysts' estimates. Revenue in dollar terms grew by 1.8% QoQ to $1,668 million with constant currency revenue growth at 0.2%. Operating numbers were ahead of expectations while deal wins at $795 million for the quarter.

IT services firm Tech Mahindra's employee headcount declined by 6,844 in the third quarter ended December 31, 2022, joining peers such as Tata Consultancy Services (TCS) and Wipro, as software firms go slow on hiring in an increasingly cautious macro environment.

The total headcount for Q3 stood at 157,068, down 4.2 percent from 163,912 in the quarter ended September. A similar trend was noticed with peers TCS and Wipro too in Q3, whose headcount dropped by 2,197 and 435, respectively.

Tech Mahindra's attrition rate (last twelve month basis) plunged to 17 percent in Q3FY23, down from 20 percent in the September quarter. The rate was also down from 24 percent in the year-ago quarter.

The firm has been seeing a drop in attrition rate since the first quarter of FY23 after a steady increase in the five quarters before that.

The company added 5,877 new staff in Q2FY23 and 3,874  in Q3FY23.

Rohit Anand, CFO, Tech Mahindra said, "For the last three quarters, we have reduced attrition rates based on our internal actions and market behaviour. We take this metric very seriously. We are now looking at having the the lowest attrition rate in the industry."

"If you see, the headcount has gone down QoQ. Most of this was on the back of BPS (business process services) segment and quarterly seasonal ramp down that happened based on the increase that was there last year. The current IT growth environment is reflective of this headcount reduction as well as our endeavour to improve our utilisation," he added.

Vivek Agarwal, President – BFSI, HLS and Corporate Development, Tech Mahindra said, "We can continue to be better performers of attrition rate in the industry and this is due to the steps we have taken in the last three-four quarters from retention perspective. But clearly the demand scenario is not as robust as it was two quarters back, hence we have already read about the hi-tech companies becoming more cautious on hiring, and that is easing supply side challenges to a large extent."

"So given the uncertainties in the market, we are trying out just in time hiring," he added.

Speaking to Moneycontrol earlier this month at the World Economic Forum (WEF) in Davos, CEO and MD CP Gurnani said that when the attrition was higher, so was the hiring and vice versa in the current situation.

“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 over the past quarter has also been facing backlash along with peers like Wipro for delaying onboarding and absorbing freshers who have been waiting for nearly two years since graduation.