News

Published: July 19, 2024
Updated: July 19, 2024

India's Top IT Firms See Over 4,500 Headcount Reduction in Q1 Amid Demand Uncertainty

Significant Workforce Reductions

India's top three IT companies have collectively reported a reduction of 4,536 employees in the first quarter ending June 30, 2024. This trend is a response to the ongoing uncertain demand environment, leading firms to optimize their existing workforce before considering new hires.

TCS Stands Out with Workforce Increase

While most IT firms are reducing their headcount, Tata Consultancy Services (TCS) has bucked the trend. TCS reported an increase of 5,452 employees for the quarter, setting it apart from its peers. This growth reflects TCS’s strategic focus on employee engagement and development, which has led to industry-leading retention rates.

Infosys and HCLTech See Major Declines

Infosys and HCLTech together saw a significant reduction in their workforce, with a cumulative drop of 9,988 employees in Q1. HCLTech experienced the steepest fall, with its headcount decreasing by 8,080. This decline is the largest the company has seen in at least five years. Meanwhile, Infosys's headcount fell by 1,908 employees.

HCLTech’s Strategic Divestiture

HCLTech’s reduction in headcount is largely attributed to a strategic divestiture. In April 2024, HCL Investments UK sold its entire 49 percent stake in a joint venture with US-based State Street International Holdings, leading to a loss of 7,398 employees. Ramachandran Sundararajan, Chief People Officer at HCLTech, stated that aside from the divestiture, the headcount remained stable, aligned with the company’s planned offshore transitions for large engagements.

Infosys Adapts Hiring Strategies

At Infosys, the decline in headcount is linked to a shift in its hiring model. CFO Jayesh Sanghrajka explained that the company has been focusing on hiring fresh graduates both on and off campus. With the utilisation rate already at 85 percent, there is limited room for additional hires until growth picks up. Infosys plans to hire 15,000-20,000 freshers in FY25, contingent on the company’s growth trajectory.

TCS’s Commitment to Employee Development

TCS’s Chief Human Resources Officer Milind Lakkad highlighted the company's satisfaction with the net headcount addition. TCS has successfully completed its annual increment process, emphasizing employee engagement and development. This focus has contributed to strong business performance and retention rates, despite the overall industry trend of workforce reduction.

Challenging hiring scenario

India’s leading IT firms are navigating a challenging demand environment, with most opting to optimize their current workforce rather than expanding it. While Infosys and HCLTech have seen significant reductions in their headcounts, TCS has managed to grow its workforce, underscoring its strategic focus on employee engagement. As the industry looks ahead, hiring strategies will likely adapt based on market conditions and company-specific growth prospects.