You are here: Home » Finance » News » Banks
;
Business Standard

Employee addition by top IT firms fall by three-fourth in FY18

The top four Indian IT firms added 13,972 employees on a net basis added 13,972 employees on a net basis

Mumbai/Bengaluru 

dfdf
dfdf

t employee addition by the top four Indian information technology (IT) services companies in 2017-18 dropped by more than three-fourth. Even though these companies showed good revenue growth during that period, the non-linearity drive the industry had undertaken had been clearly paying dividends.Photo: Shutterstock

In the year ended March 31, 2018, the top four Indian IT firms, including Tata Consultancy Services (TCS), Infosys, Wipro, and HCL Technologies collectively added 13,972 employees on a net basis (taking into consideration the number of people exited in the year), added 13,972 employees on a net basis

The addition of fewer employees in 2017-18 when compared with the previous year indicates the increasing focus on automation tool and technologies that the industry has been embracing to improve efficiency and service clients better.

“Am

"); testing.. we are here....
Notice: Trying to get property of non-object in /usr2/unibs/application/modules/article/views/scripts/manager/display-story-audio.php on line 144
/include/_mod/site/html5/js/bootstrap.js"> --> idst continued broadly positive earnings reports, the indicators for headcount reiterate the secular shift from labour arbitrage toward notions of digital and automation,” said Tom Reuner, managing partner, Business Operations Strategy and M&A Advisory at HfS Research. “The deceleration of hiring or even the reduction of headcount progresses much faster than we did anticipate,” he added.

The 2017-18 financial numbers of these companies also indicate the industry has been able to firmly delink headcount growth from that of revenues, which augurs well for the industry in the long term. For example in 2017-18, TCS posted a revenue growth of 8.6 per cent, even though its headcount grew just 2 per cent. Infosys, India’s second-largest IT services company, posted a revenue growth of 7.2 per cent, while its headcount increased only 1.9 per cent during the fiscal year. In case of Wipro, the dollar term revenue growth in the fiscal year was 5.5 per cent, while employee count went up only 1 per cent.

Saurabh Govil, president and chief human resources officer of Wipro, says while the non-linearity drive is at play, it does not mean the company would step back from hiring the required number of people when there is a client demand for certain technologies or skill sets. “There is a greater deal of focus on non-linear methods and automation across the industry,” says Govil. “But you will have to start seeing headcount and revenue linkage in two parts. The first part is driven by the need to invest and hire across the globe, localise, and get new skills. The second part will see productivity happening, driven from the tools we are going to use. This trend will continue.”

Brokerage firm Nirmal Bang in a recent report said that, “structural pressures … will continue to constrain growth (for tier 1 IT companies).” These include value compression and cannibalisation from automation, movement to cloud, and a weaker but improving competitive position in ‘new areas’ and insourcing.

Most of the large companies have also toned down their hiring plans in 2018-19 as they continue to invest in digital technologies. TCS, with 20,000 campus offers last year that will start joining in 2018-19, said it will follow just-in-hiring model for lateral hiring, based on the actual requirements.

The company added only 7,775 people in 2017-18, compared to 33,380 the year before, even as employee attrition rates fell to a low of 11 per cent in the fourth quarter.

In the year, the share of digital shot up from 17.9 per cent to 23.8 per cent of total revenue. TCS management has also indicated double-digit revenue growth for 2018-19 on the back of localised hiring and large-scale reskilling.

“TCS has been building capacity, especially for digital, over the last 18-24 months. With high utilisation of the trained workforce, hiring is expected to remain controlled in the near future,” brokerage firm JPMorgan said in a recent report.

First Published: Sat, May 19 2018. 07:03 IST
RECOMMENDED FOR YOU


Notice: Undefined property: stdClass::$canonicalUrl in /usr2/unibs/application/modules/article/controllers/ManagerController.php on line 449