Tata Consultancy Services, HCLTech, and Infosys saw net employee additions dip to a five-year low as global curbs on discretionary tech spending compelled IT majors to pare their bench. In the second quarter of FY24, the net additions to headcount were not only in the red, but firms were reporting the largest quarterly reduction in their rolls in the last five years.
As TCS warned of continued weakness in tech spending in the US, which contributes to nearly half its revenues, the firm reported a negative net addition of 6,333 employees to its total headcount in Q2FY24.
Infosys, which has been reducing its headcount for the past three quarters, saw its bench strength reduced by another 7,530 employees. HCLTech saw a negative net addition of 2,299 to its headcount in the same quarter.
While these are the largest quarterly reductions that the IT firms have reported to their overall headcount since FY18, this trend has been going on for at least a year.
ThE Ai EFFECT
Till the end of FY22, IT firms continued to hire big to keep up with the pandemic-induced increase in tech spending around the globe. Now, firms are paring their bench as tough macroeconomic conditions continued exacerbated by technologies like AI that reduce the need for a large workforce.
As IT companies see their clients pause or defer projects, Tier-1 firms are increasingly deploying available talent for projects instead of hiring more in an attempt to improve employee utilisation. Strategies such as mandatory work from office have also been re-emphasised to boost efficiencies.
However, TCS Chief Human Resource Officer Milind Lakkad says that business demand and business situation should not be related to the degrowth in headcount.
“People coming in for the last 18 months are getting leveraged now,” he said at the Q2 press meet.
reduced hiring
Experts predict that net headcount additions are projected to remain negative for the second half of FY24 as well, as top IT firms continue to reduce hiring in the current economic landscape.
Krishna Vij, Business Head of IT Staffing at TeamLease, said, “Overall hiring sentiments are significantly impacted by the current geopolitical and macroeconomic situation, contributing to a challenging hiring landscape. The uncertainties surrounding the future, coupled with various other factors beyond the macroeconomic scenario, compound the hiring outlook.”
“Notably, fresher hiring is already affected due to lower intake announced bymost IT majors. It is anticipated that there will be a substantial reduction of 40–50 per cent in the overall intake of freshers across the IT sector. This reduction is expected to affect last year’s and this year’s batch,” she added.
