Headcount at IT companies likely to shrink for the first time in 25 years
The beginning of FY24 until September, around 51,744 jobs were lost within the IT industry.
In a challenging year, amid escalating geopolitical and economic risks in the US and Europe as global clients cut down on their discretionary spending, Indian information technology (IT) companies may see a fall in headcount for the first time in 25 years in FY25. Nine of the top 10 IT services companies in the country have already seen their workforce fall in the first six months of the fiscal year 2024. Net headcount registered an even steeper decline sequentially across the top five companies as they resorted to reducing the intake of freshers and backfilling attrition.
Further, the current hiring trend signals a cautious approach as IT majors are deferring their campus hiring plans for FY25 and, as per experts, may look to hit the tech institutes only after the Q4 period of FY24. In fact, hiring was at an all-time low in FY24.
Bengaluru-based tech giant Infosys, on the sidelines of its earnings announcement earlier in the month, said, “At the moment we are not going to the campus; we will look at the future predictions and act accordingly.”
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On the other hand, HCL Technologies, while affirming to hit the campuses this year, announced that it will onboard just 10,000 freshers as against the 27,000 it recruited last fiscal year.
The reduced pace of hiring by Tier 1 techs, in particular, highlights that companies within the space do not see any signs of recovery in the near term and focus on internal fulfilment instead. Further, it underlines weak volumes and a muted near-term outlook for discretionary demand revival. IT companies are reportedly targeting margin improvement by substituting subcontractors and thinning the bench.
So far, from the beginning of FY24 until September, around 51,744 jobs were lost within the IT industry. Given the low-demand environment, there are expectations of elevated furloughs in industries, including BFSI, manufacturing, hi-tech, and some other verticals.
Notably, the IT industry’s workforce is seen to lose count even as attrition rates continue to decline and are much below pre-Covid levels.
Here’s a quick summary of the headcount at the top IT players as of September 30, together with the change in H1FY24 over the previous year:
|Companies||Headcount at the end of Sept 30||Change during H1FY24|
Performance of top IT services companies
The Nifty IT index has underperformed the benchmark Nifty by a wide margin over the last three years amid macro uncertainties.
TCS shares in one year have delivered just a 6.6 per cent return, while Infosys and HCL Tech during the same time frame have given (-)10 per cent and 22.4 per cent returns, respectively.
On the other hand, Wipro and Tech Mahindra have given -0.1 per cent and 4.2 per cent returns, respectively.