Headcount shrinking at top IT cos in India

Due to low project flow and loss of digital deals, IT firms are struggling with huge number of reserve employees, especially of freshers. All IT firms are looking at cost optimization measures to control cost and manpower reduction is one of the steps that the companies are looking at - A senior executive at a Bengaluru-headquartered IT firm

Dwindling Number

♦ Top three IT firms- Infosys, TCS, HCL Tech- saw fall in headcount in Q2

♦ Most firms are stuck with many reserve employees without any project

♦ Experts see no improvement in hiring sentiment for coming quarters

Bengaluru: Involuntary attrition and lack of backfilling led to substantial fall in employee count of top three IT services companies of India, which is unlikely to change in the coming quarters. Sources in the know said after hiring record number of employees, Indian IT firms are facing huge bench strength (reserve employees) owing to low demand.

“Due to low project flow and loss of digital deals, IT firms are struggling with huge number of reserve employees, especially of freshers. All IT firms are looking at cost optimization measures to control cost and manpower reduction is one of the steps that the companies are looking at. During the second quarter, lot of vacancies coming from both voluntary and involuntary attrition were not filled up,” said a senior executive at a Bengaluru-headquartered IT firm.

“Going ahead, we don’t see much of a change and October-December is traditionally a weak quarter owing to furloughs,” the person added.

Market leader Tata Consultancy Services (TCS) witnessed a drop in headcount by 7,186 employees to 616,171. Similarly, Infosys saw it headcount shrinking by 7,530 in Q2 at 328,764, which is third consecutive quarter of decline for the company.

“We have hired around 50,000 freshers last year, based on our demand projections. Now, we have a good bench strength of freshers, who are getting skilled in many emerging technology areas. So, there is not going to be any campus placement this year,” Nilanjan Roy, Chief Financial Officer of Infosys, said.

Similarly, HCL Tech’s net headcount addition also declined like its peers. The headcount dipped by 2,299 in Q2, taking the company’s total headcount at 2,21,139.

“Our employee count decreased by one percent on a sequential basis because we consciously didn’t backfill attrition as a lot of freshers we hired in the last 18 months are now ready to be deployed,” CEO and MD of HCL Tech, C Vijayakumar said post earnings on Thursday.

Sources in the know said this dip in total employee count is not going to be very different for mid-tier IT companies, which will announce their results in coming days.

In FY22 and FY23, most IT firms had hired a record number of freshers as the pandemic-led demand surge. Now, with demand going down, most firms are stuck with many employees who can’t be deployed in any projects. “If things don’t improve in coming quarters, IT firms may have to shed employee strength further to protect their margins, which are under pressure owing to low growth in revenue,” said the source.