Wipro, Tech Mahindra, TCS: Hiring crashes up to 96% at major IT firms; what to expect next?

The Indian IT industry has reported underwhelming numbers in the latest earning season, signaling a challenging time for the sector in the face of tough macroeconomic conditions. A result of the slowdown in the IT sector is the decline in hiring numbers and net employee addition across major companies in FY 2022-23.

Tech Mahindra, which announced its earnings last week, reported a net employee addition of 1,227 in FY 23 as compared to 30,119 in FY 22, crashing a significant 95.93 per cent.

A similar fall was recorded in hiring numbers of Wipro. The company’s net employee addition in FY 23 was 13,793, which is almost one third of employee addition in FY22, which was 45,416.

As previously reported by Business Today, hiring numbers fell at TCS, Infosys, as well as HCLTech in FY 23 YoY. Net employee addition at TCS fell 78 per cent, at Infosys, it was down 46 per cent, and was down 57 per cent at HCLTech.

Industry insiders and experts explained that this slowdown in employee addition was because of the fall in demand for IT services.

Kalyan Durairaj, Director of HR at FourKites (APAC), said, “The current slowdown has definitely impacted hiring and expansion. Due to economic uncertainties, IT companies are being cautious with their hiring plans, resulting in a slowdown in headcount growth.”

The IT sector was already facing a slowdown due to a drop in demand because of the macroeconomic conditions, but the banking crisis that played out in February-March of this year led to further ramp-down in existing deals of IT companies and cutbacks in discretionary spending.

TCS Chief Operating Officer N. Ganapathy Subramaniam explained this in an exchange with Business Today and said, “Towards the middle of February and March, the banking crisis happened which slowed down things a bit. Many of our customers felt that it was time to be a little cautious.”

Similar thoughts were shared by the Infosys management.

CEO Salil Parekh said during the earnings call, “During the quarter, we saw some ramp downs which were unplanned and these were across different sectors. We saw some in Telco, we saw some in Tech, some in Retail, and within Financial Services.”

The management commentary of major IT companies in India during the Q4 FY23 earnings hinted that they would continue to hold on to this cautionary approach while hiring for the next few quarters.

HCLTech Chief People Officer Ram Sundarajan said, “The FY 24 hiring plan will be moderated on the back of the net additions that we have done in the last two quarters.”

The increasing bench size is also becoming a concern for major IT companies in India. To utilise the bench better, companies are focusing on reskilling and upskilling their employees in areas where the demand is highest.

Harshvendra Soin, Global Chief People Officer and Head of Marketing at Tech Mahindra said during the earnings call, “In FY 23, our main focus was on upskilling. Our focus continues to be on upskilling and providing opportunities to our internal folks.”

Companies are dialing back on hiring and considering using automation to improve productivity with the increasing interest in AI.

“We will have some headwinds. We need to see things like utilisation and more automation, etc, so we also have a runway in terms of employees due to just 80 per cent utilisation,” Parekh said hinting at moderation in hiring.

Also Read: TCS, Infosys Wipro: How Credit Suisse, SVB collapse can impact Indian IT sector - BusinessToday

Also Read: TCS, Infosys, Wipro: Are huge bench sizes dragging down Indian IT majors? - BusinessToday

Also Read: TCS, Infosys, HCLTech: Hirings drop up to 78% in FY23 at major IT companies - BusinessToday