Layoff binge bottoming out at IT firms in India

There may be still some room for further headcount reductionin line with demand rebalancing.However, we are starting to get to the end of this cycle -- Peter Bendor Samuel, CEO, Everest Group, tells Bizz Buzz

Light At End Of The Tunnel

• Big IT firms continued to shed employees in Q3
• It aimed at matching the current demand environment
• TCS, Infosys, Wipro shed headcount in Q3, while HCLT added employees
• Layoff slowdown indicating hiring trend to turn positive soon

Bengaluru: Indian IT industry is reaching the last leg of its headcount reduction and may see hiring picking up in coming quarters as most of the bench strength gets utilised. According to experts, the top four IT firms – TCS, Infosys, HCL Tech & Wipro- have been increasing their employee utilisation levels as seen in recently announced Q3 results. This is reaching a point where a small revival in demand will prompt them to hire resources.

“There may be still some room for further headcount reduction in line with demand rebalancing. However, we are starting to get to the end of this cycle,” Peter Bendor Samuel, CEO of global consultancy firm, Everest Group, told Bizz Buzz.

In the quarter ended December, big IT firms continued to shed employees in order to match the current demand environment. Market leader Tata Consultancy Services (TCS) saw its total headcount falling by 5,600 to 603,305employees during the third quarter. Similarly, the overall headcount of Infosys fell by 6,101 to 322,663 by the end of December quarter. Wipro’s headcount declined for the fifth consecutive quarter, as total employee count fell by 4,473 to 240,234 during this period.

HCL Tech was the only large IT firms to buck the trend. Its net headcount addition has increased by 3,617 in the third quarter ended December in line with the company’s plans to start hiring after two previous quarters of slowdown.

Management of IT firms has indicated that though they have adequate bench strength, but they are hiring for specific skillsets.

“We continue to hire people with specific skill sets. However, we have certain headspace to improve our employee utilisation rate further. So, our hiring will depend on the demand environment,” Saurabh Govil, Chief HR Officer of Wipro, said during the post results press conference.

Wipro’s CEO Thierry Delaporte said that the company was witnessing some good indicators of growth.

Amid such downtrend in hiring, fresher hiring has been the worst hit in recent quarters. However, HR experts said the industry is turning the corner.

“Owing to the impact of the ongoing macro-economic challenges, the Q3 performance of leading IT companies indicated a subdued growth. The headcount of the major IT players continued to decline in the third quarter, posing concerns, particularly for freshers, as several IT firms are either abstaining from campus hiring or adopting a restrained hiring approach. Despite these industry hurdles, there is slight optimism within the sector. Students equipped with the right skill set can make a significant impact,” Sachin Alug, CEO of NLB Services, said.

Meanwhile, employee utilisation levels are slowly reaching optimum point with more freshers getting engaged in projects. For instance, employee utilisation level of Infosys reached 81.7 per cent in December quarter as compared to 80.4 per cent seen in the previous quarter. Similarly, net utilisation level of Wipro reached 84 per cent in December quarter.

Sources in the know said the space for improvement in employee utilisation levels is slowly shrinking, reflecting good times for hiring if demand improves.