The Hindu Business Line : Hexaware to trim workforce by 5%

Low utilisation rates coupled with the uncertain economic environment in US is forcing the company to consider a slowdown in hiring. This, combined with a high attrition rate, would see the employee strength go down by 300 (by the year end).

The headcount would be around 6,300 from about 6,598 as at June end, Mr P.R. Chandrasekar, Chief Executive Officer and Vice-Chairman of the company, confirmed to Business Line.

“We do have a challenge on our HR front; a fair amount of this is related to attrition that we are not back filling. Moreover, there will always be non-performers weeded out at regular intervals,” Mr Chandrasekar said.

For the June quarter, the mid-sized IT firm reported a 24 per cent attrition rate on an annualised basis, which is well below the industry benchmark.

This comes at a time when Hexaware is grappling with delayed executions in existing contracts and lengthening decision-making cycles for new engagements courtesy the US recession. Hence, analysts say that many mid-sized IT companies are cutting down on labour costs.

The across-the-board uncertainty, especially in the US, has caused IT companies of all sizes to go slow on manpower addition, according to Mr Gauarv Dua, Head of Research, Sharekhan Securities.

Cuts guidance

Hexaware has cut its revenue guidance for fiscal 2009 to $270 -$275 million from $310 - $315 million

For the quarter to June 30, Hexaware said its net profit fell by 63.5 per cent to Rs 9.51 crore from Rs 26.12 crore a year earlier; revenues grew 8.7 percent to Rs 284 crore.

For the June quarter, Hexaware’s utilisation rate was around 64 per cent. With a smaller employee base, the company would be able to improve this to 70 per cent in the next 2-3 quarters, added Mr Chandrasekar.

“We believe we have enough headroom available in the bench to manage growth without addition of headcount”. In the previous quarter, the company had reduced its headcount by about 329.

Separately, Hexaware has outlined a capital expenditure plan of Rs 116 crore for the current fiscal, the company Chief Financial Officer, Mr Prateek Aggarwal, said. However, the company did not provide a break-up of how these funds will be used.

More Stories on : Financial Performance | Software | Human Resources

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page