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In today’s newsletter:

• Top 10 Indian IT firms' employee count falls 21K in Q1
• Now, Byju's defers appraisals 
• Gen-AI SaaS market hots up in India

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It has been a distressing quarter for most Indian IT companies. The employee count of the top 10 IT companies in the country has fallen by 21,327 in the first quarter of the fiscal.

Why is this important? Employee addition is an indicator of demand, and the road ahead for now is foggy at best.

• For comparison, these 10 companies added 69,634 employees in the same quarter last year

Only four of the top 10 companies added people this quarter — Tata Consultancy Services, L&T Technology Services, Coforge, and Persistent.

Of the remaining six, Wipro saw the steepest decline in headcount, with 8,812 fewer employees at the end of the quarter.

• This was the third consecutive quarter of headcount decline for Wipro, as well as for LTIMindtree, Mphasis, and Tech Mahindra

Why? Companies have said they hired in advance and are using their existing bench strength, increasing utilisation, deploying freshers, and only backfilling attrition that is necessary.

IT companies are looking to do more with less and are being very judicious with resources, experts say.

• For now, both Q2 and Q3 are not expected to see any increase in headcount numbers
  
  
• In fact, IT is expected to see headcount movement in the negative territory for the year as well

However, there is one bright spot: as IT companies slow down, global capability centres in India are ramping up and absorbing some of this talent.

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Byju’s employees are having an unpredictable week.

• The company first gave up its largest office space in Bengaluru

• Then, it delayed PF payments despite coming under the scanner of the EPFO last month. The edtech firm, however, later remitted the payments

• Next, two of its biggest investors openly talked about corporate governance issues

And now, the company has deferred appraisals for all employees.

Byju’s de facto India head Mrinal Mohit told employees at a town hall last week that the company is still unsure whether it plans to conduct performance appraisals this year.

Employees who have been asking their HR and reporting managers about appraisals have also not been given any clarity on when the company will conduct them.

• A majority of employees are also yet to receive their incentives and variable pay

Byju’s has been struggling to close a large funding round that it has been eyeing since the start of the year. As a result, the company has been aggressively cutting costs on all fronts to conserve cash.

In addition, Byju’s has officially laid off more than 2,000 employees this year. 

• It has also moved most of its employees to a contract basis to save on certain statutory payments like PF

Byju’s is also yet to receive almost half of a $250 million fundraise that it raised from Davidson Kempner in May.

Go deeper

If there were a star award for emerging technologies each year, Generative AI would surely win in 2023. 

The tech has made a stunning entry into the market and is now disrupting India’s Software-as-a-Service (SaaS) sector. 

The number of Indian Gen-AI-based SaaS startups has more than doubled since 2021, reaching 60 in number.

• These startups have raised a whopping $590 million in funding as of May 2023, according to a report by SaaSBoomi and McKinsey.

The report also projects that the Indian SaaS ecosystem is poised to generate $50 billion in revenue and reach an enterprise value of $0.5-$1 trillion by 2030, thanks to the adoption of disruptive technologies like Gen-AI and other favourable factors.

Earlier in the day, SaaS-focused venture capital firm Together Fund launched its second fund. Interestingly, the investment focus will be on generative AI and SaaS.

“We will continue to focus on the Business-to-Business (B2B) segment and within that AI and SaaS are the main focus areas for us,” said Manav Garg, founding partner of Together Fund. 

While seed and early-stage SaaS has been investors' favourite, Gen-AI is definitely the buzzword. In fact, from creating new AI capabilities to integrating AI chatbot ChatGPT into customer-centric operations, India's top SaaS firms like Freshworks and Zoho are already investing in and exploring the booming technology.

• OpenAI, Microsoft, Alphabet's Google and Anthropic are launching a forum to support safe and responsible development of large machine-learning models.
  
  
• Meta plans to make money from cloud-computing companies when they resell its large language model, Llama 2.

The question of whether or not we are alone in the universe has long fascinated humans. And while there is no definitive answer, the recent congressional hearing on UFOs has only added to the intrigue.

A former American intelligence official claimed that the US government has been conducting a “multi-decade” programme to collect and reverse-engineer crashed UFOs. (Watch the full hearing here)

• The official, David Grusch, also alleged that the government has recovered “non-human” beings from crash sites

So, what’s the truth about UFOs? Are aliens among us? In the meantime, let’s all keep an eye out for little green men. 

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