Top 5 Indian IT services companies saw a decline of 69,167 employees in FY24

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Top five Indian IT services giants including Tata Consultancy Services (TCS), Infosys, HCLTech, Wipro and Tech Mahindra together lost around 69,167 employees in the fiscal year 2024, amidst an uncertain demand environment.

To be sure, HCLTech was the only company among these to have added employees both in the fourth quarter ended March 31 and the full year FY24.

This would be the first time in at least the last five fiscal years that the IT services companies have reported an overall decrease in full-year employee addition.

For the full year FY24, TCS’ headcount was down by 13,249, Infosys’ headcount dropped by 25,994, while Wipro added 24,516 fewer employees in FY24. Tech Mahindra, which reported its earnings on April 25, saw its headcount drop by 6,945.

HCLTech, instead, saw a net addition of about 1,537 employees in FY24, though it’s still a small number.

As of Q4, TCS’ employee addition dropped by 1,759, Infosys’ headcount plunged 5,423, Wipro’s headcount decreased by 6,180 and Tech Mahindra’s net addition was down by 795. HCLTech added 2,725 employees on the contrary.

Analysts said this is largely due to the lack of growth seen in FY24, which made companies shift to focus on improving margins and utilisation rate instead.

Pareekh Jain, founder of EIIRTrend said, “Since the growth was not happening in FY24, the companies were more focussed on improving margins which led to lower hiring. Once the growth is back, headcount will start increasing. Also, with generative AI coming in, companies might not even require that many employees, and we will see more just-in-time hiring depending on the requirement.”

According to Gaurav Vasu, founder of market intelligence firm UnearthInsight, headcount decline was on the expected lines.

“We believe industry headcount will get stagnated over the next two to three years. Due to de-growth, the companies will continue to focus on generative AI, improving utilisation etc. The 5.4 million industry headcount will remain around the same lines for at least the next one or two years for sure. Our goal of reaching 10 million headcount in the technology industry looks very difficult for now,” he told Moneycontrol.

Vasu added, “With generative AI transformation coming in, we expect headcount to stagnate at 6-6.5 million by 2030.”

What companies said

While Infosys and Wipro shied away from sharing exact fresher hiring targets for FY25 saying that the companies are seeing a shift in traditional hiring models especially freshers, TCS will be adding about 40,000 freshers, HCLTech is adding over 10,000 freshers and Tech Mahindra will be hiring 6,000 freshers respectively.

All the companies have reported strong deal pipelines in Q4, yet there seems to be a divergence happening between deal wins and employee addition.

Explaining this, TCS CEO and MD K Krithivasan in an interview with Moneycontrol said, “We look at the trainees we deploy, we put them through our own internal training mechanisms and maybe after a period of 6 to 8 months, they become productive and billable. So, there will always be a lag.”

Infosys CFO Jayesh Sanghrajka said, "We have changed our hiring model significantly. We no more hire all the freshers from campus. We hire less than half of them from campus and more than half of them off campus."

According to Saurabh Govil, CHRO at Wipro, campus hiring is a combination of looking at demand, utilisation and when the hiring is going to happen.

“We have significantly improved our utilisation this quarter, it’s an all-time high. We hope to increase and sustain that. We have been able to reduce our bench which was there and deploy people faster,” he said.

“The year before last there was huge demand, so post Covid, we went to the campuses and made large number of offers. We are still to finish with all those offers. We have promised and we will first ensure all those offers are honoured before we go and hire somebody else. That’s the plan as we move forward," he added.

Tech Mahindra will continue to hire, train and deploy early career professionals and freshers in FY25, to control resource costs and manage margins as well.

HCLTech too is on track to continue hiring in FY25 and has been investing in people practices and setting up new programs to engage and train employees, said chief people officer Ramachandran Sundararajan.