69,167 fewer people worked for the top 5 Indian IT services businesses in FY24

69,167 fewer people worked for the top 5 Indian IT services businesses in FY24

Employees at four of the top five IT firms—TCS, Infosys, Wipro, and Tech Mahindra—lost their jobs consecutively in Q4 and for the whole fiscal year FY24. HCLTech deviated from the norm.

Due to an unstable market environment, the top five Indian IT services companies—Tata Consultancy Services (TCS), Infosys, HCLTech, Wipro, and Tech Mahindra—collectively lost almost 69,167 workers in the fiscal year 2024.

Indeed, among these, HCLTech was the only one to grow its workforce during both the fiscal year FY24, which concluded on March 31, and the fourth quarter, which ended on March 31.

This would be the first time that the IT services firms have recorded an overall reduction in full-year personnel increase in at least the past five fiscal years.

Over the course of FY24, TCS had a 13,249 reduction in manpower, Infosys saw a 25,994 decrease, and Wipro gained 24,516 fewer workers. Tech Mahindra had a 6,945 reduction in personnel after their April 25 results announcement.

In FY24, HCLTech saw a net increase of around 1,537 people; nonetheless, this remains a rather modest figure.

In Q4, TCS had a 1,759 fall in personnel additions, Infosys saw a 5,423 decline, Wipro saw a 6,180 decrease in headcount, and Tech Mahindra saw a 795 decrease in net additions. Conversely, HCLTech hired 2,725 more people.

According to analysts, this is mostly because to FY24's lack of growth, which forced businesses to concentrate on increasing profitability and utilization rates.

"Since the growth was not happening in FY24, the companies were more focused on improving margins which led to lower hiring," EIIRTrend founder Pareekh Jain said. As soon as growth resumes, headcount will rise. Additionally, with the introduction of generative AI, businesses may find that they don't even need as many workers, and just-in-time hiring may increase based on the need.

The personnel drop was in line with expectations, according to Gaurav Vasu, founder of the market research company UnearthInsight.

"We predict that during the next two to three years, the number of industry staff will stagnate. The businesses will keep concentrating on generative AI, increasing utilisation, etc. due to de-growth. There is little doubt that the 5.4 million industry headcount will be around the same over the next year or two. For present, it seems extremely impossible for us to fulfill our target of having 10 million people working in the technology sector, he told Moneycontrol.

"With the coming generative AI transformation, we expect headcount to stagnate at 6-6.5 million by 2030," Vasu said.

What businesses stated

While TCS, HCLTech, and Tech Mahindra will hire roughly 40,000, 10,000, and 6,000 freshers respectively, Infosys and Wipro refrained from disclosing specific hiring targets for FY25, citing a shift in traditional hiring models, particularly with regard to freshers.

While all of the firms reported robust Q4 transaction pipelines, there seems to be a discrepancy between contract wins and staff additions.

"We look at the trainees we deploy, we put them through our own to improve our internal training mechanisms, and possibly after a period of 6 to 8 months, they become productive and billable," TCS CEO as well as MD K Krithivasan said in an interview with Moneycontrol. Thus, a lag will always exist.

Jayesh Sanghrajka, CFO of Infosys, said, "We have made major changes to our recruiting approach. We no longer employ all of the recent college graduates. We employ almost half of them off campus and fewer than half on campus."

Campus recruiting involves considering demand, utilization, and the hiring timeline, according to Saurabh Govil, CHRO at Wipro.

This quarter, we achieved an all-time high in utilization thanks to tremendous improvement. Our goal is to maintain and grow that. We've been able to deploy individuals more quickly and minimize our existing bench," he added.

"We went to the schools after COVID and made a lot of offers since there was a lot of demand the year before last. We still have all those offers to complete. Prior to hiring someone else, we will make sure that all of those offers are fulfilled as we have promised. That's the strategy going ahead," he said.

In FY25, Tech Mahindra will keep hiring, training, and deploying early career professionals and freshers in order to maintain margins and keep resource expenses under control.

According to chief people officer Ramachandran Sundararajan, HCLTech is also planning to hire in FY25. The company has been investing in people practices and establishing new initiatives to engage and teach staff members.