Large Indian IT recruiters — Tata Consultancy Services (TCS), Infosys and Wipro — started the first quarter of this fiscal with a bang registering a sharp increase in net employee hiring in the backdrop of some big-ticket deals. The combined net employee addition of the three firms in Q1FY22 was 40,921 as against 37,099 in the previous quarter and a net reduction of 9,444 in the same quarter last year when the Covid-19 pandemic was at its peak.

Net employee hiring is a key metric used to gauge the pulse of the IT industry, which bounced back strongly from the impact of the pandemic last year.

For TCS, it was a double delight during Q1 as it reported the highest ever quarterly net hiring, and the company’s total headcount went past the 5-lakh mark to 509,058.

On the deals front, TCS announced Total Contract Value (TCV) of $8.1 billion in Q1 across markets and verticals; Infosys said large deal flows remained strong with TCV of $2.6 billion in Q1 and Wipro closed eight large deals resulting in a TCV of over $715 million.

Normalising costs

As the pandemic situation improves across the world and businesses slowly return to normalcy, Infosys expects some of the discretionary costs, including travel facilities, to start normalising in the coming quarters, its CFO Nilanjan Roy told analysts while discussing the company’s first quarter financial results.

In the second quarter, the company will also roll out compensation hikes to the majority of its employees. With the talent market remaining weak, the company is anticipating continuing costs relating to employee retention, acquisition and well-being in the short-term, he added.

The demand scenario is improving and therefore, now it has become a supply-constrained market. However, service providers are not hiring/training as fast as the demand is rebounding, said Yugal Joshi, Vice-President at Everest Group, a global research firm.

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High utilisation ratio

The net addition should also be seen from a low base of last year. Service providers have realised high attrition is here to stay and therefore, they have to hire more than the immediate need. Many companies such as Infosys are witnessing a very high utilisation ratio which is unsustainable, and hiring more people reduces this ratio, he said.

In the context of recent new client wins and increased attrition, the net employee additions are signs of good times for IT Services companies, said Kamal Karanth, Co-Founder, Xpheno, a specialist staffing solutions company. The increased digital adoption post-pandemic will only augment these additions further, he added.

However, they are in for a stiff competition for talent the next four quarters from the highly funded start-ups, multinational companies, technology captives as they are also expanding, and all of them are fishing in the same pond for similar talent, he said.

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