Five of the country’s ten largest IT services firms reported a sequential decline in sales and support staff in the third quarter, as they let go of non-revenue generating employees and imposed an informal hiring freeze.
After a period of whirlwind expansion since the pandemic outbreak, Indian IT services firms have hit the pause button.
Five of the country’s ten largest IT services firms reported a sequential decline in sales and support staff in the third quarter, as they let go of non-revenue generating employees and imposed an informal hiring freeze.
Wipro Ltd and Tech Mahindra Ltd, the country’s fourth and fifth largest IT services firms, reported a sequential decline in the number of sales and support staff and software engineers, respectively, in July-September.
L&T Technology Services Ltd, the smallest of the three IT firms owned by engineering and construction conglomerate L&T, and Hyderabad-based Cyient Ltd also had fewer sales employees in the most recent quarter. Zensar Ltd, the tenth largest IT firm, also reported a sequential workforce reduction. This is the first consecutive decline in headcount at any company.
As business shifted online, IT services firms went on a hiring spree in the midst of the pandemic. The ten largest IT firms added nearly a third of their workforce, or half a million people, between July 2020 and September 2022.
At the end of September, the ten largest IT firms employed 1.74 million people.
However, concerns about an impending recession and declining profitability have altered the mood — and approach — of some technology services firms.
Hiring at the three largest IT services firms—Tata Consultancy Services Ltd, Infosys Ltd, and HCL Technologies Ltd—was also the slowest in two years in July-September.
Staff costs account for 55-65% of total expenses at IT firms; as a result, some firms are taking a cautious approach to hiring experienced professionals.
Wipro’s operating margin was 15.1% at the end of the September quarter, down from 19.2% at the end of June 2020.
Tech Mahindra’s profitability was 11.4% at the end of the most recent quarter, compared to 10.1% at the end of June 2020. However, its operating margin hit a high of 15.2% at the end of the June quarter, prompting the company to cancel all non-essential travel and hire fewer experienced employees.
