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Last Updated : Aug 02, 2020 12:56 PM IST | Source: Moneycontrol.com

Top IT firms’ headcount fall 20,000 in June quarter: Will this be the norm in coming quarters?

Of close 50 lakh IT/ITeS employees, these six companies alone employ about 13 lakh people. From this standpoint, this drop in headcount and what is likely to follow could be worrying trend.

 
 
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Top IT firms have announced their results for the quarter ended in June. At the back of the pandemic, results were better than expected and order bookings were strong. Executives said the worst is over with growth visibility in sight.

However, the same cannot be said about their headcount. The total employee count dropped by close to 20,000 across the top IT majors.

To be specific, Infosys’ headcount dropped 3138 and TCS’ 4788. Close to 1,082 people had left Wipro in Q1. In Tech Mahindra, it was close to 2000. The largest probably was from Teaneck-based Cognizant, where the drop was close to 10,000. HCL Tech saw the least fall at 136.

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These firms are one of the largest recruiters in the country. Of close 50 lakh IT/ITeS employees, these six companies alone employ about 13 lakh people. From this standpoint, this drop in headcount and what is likely to follow could be a worrying trend even considering the hiring freeze and delay in fresher on-boarding at the back of COVID-19.

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Hiring in IT outsourcing firms have changed over the years. Concept of mass recruitment, where companies recruit in hundreds, is long gone. Back in 2010, these companies would have recruited a few hundreds in top tier engineering colleges and go to tier II engineering colleges for more recruitment.

That has long since stopped. In an earlier conversation, a recruitment head in a top engineering college in Bengaluru, pointed out that though IT firms continue to be the largest recruiters, numbers have definitely come down.

"For us, 100 percent recruitment is a myth," the head added.

With automation taking over and digital becoming mainstream, companies are now expecting students to have some understanding of the same.

For instance, along with aptitude tests and interviews, hiring now involves coding contests and a much more stringent recruitment process. Also, roles are now assigned based on how students perform in those tests.

For instance, you would be given the role of developer with a better pay scale, say Rs 6.5 lakh per annum, if you are good at coding. For others it could be software testing or maintenance and support roles with an average package of Rs 3.5 lakh per annum.

This does not stop there though. Once recruited, these students will have to keep upskilling themselves in new age technologies to stay relevant. Failing which, they are mostly likely to be shown the exit door.

This is exactly what is happening in IT firms though these companies are keeping mum about the nature of these exits and continue to say some of them are performance-related without sharing the actual figures.

The only IT firm that shared involuntary attrition figures till March 2020 quarter, Infosys, stopped in June. Their reason was that they don’t see the reason when other firms have never shared the involuntary attrition numbers.

On the other hand, Cognizant, which has about two lakh workforce in India, is taking a conscious decision to let go of employees under its Fit for Growth plan. Under its Fit for Growth Plan the company aims to cut cost and optimise the operating model by trimming the workforce. According to the firm, this would result in annualised savings of $500-550 million.

As a part of this plan, in October last year the company let go of 7,000 mid and senior employees. By June 2020, another 10,000 employees were let go.

Other IT firms have not technically put a strategy in place. However going by the recent decline, involuntary attrition would have seen an increase, pointed out experts and added that it is to be expected.

Most of these employees that are being let go are in the mid and senior level. Unlike the younger workforce, not all of these employees have not been able to adopt. Also they are expensive compared to a fresher who could be trained and deployed in a technology much faster pace than the senior employees.

This is important since the kind of projects that are coming in require employees to be efficient in new age technologies such as cloud, cybersecurity and data sciences. Though these talents are not readily available, companies have accelerated their reskilling programme to cater to the demand. Those employees who are unable to adopt are being laid off.

Pravin Rao, COO, Infosys, accepted as much during the quarter results last year, when he said that employees who are unable to adopt were let go.

This is likely to be the norm in the coming quarters. Unlike a few years back, the pace of change requires both employees and companies to be more agile. While companies are trying to keep up with the demand, employees need to step up as well.

Like Mohandas Pai, former CFO, Infosys, pointed out, Indian IT industry has a thick-fat middle that needs to be corrected, even if it means letting go.
First Published on Aug 2, 2020 12:56 pm
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