IT companies rethinking talent strategies to keep cost in check

Haripriya Sureban | | Updated on: Aug 22, 2022
Logos of Wipro and TCS

Logos of Wipro and TCS

Wipro and TCS delay variable pay to mid and senior-level executives and some employees, respectively

 

After two major Indian IT companies, Wipro and TCSannounced the deferral of variable payout to their employees, human resource consultants say companies are looking at talent cost moderation and even rethinking their hiring strategies. 

Wipro and Tata Consultancy Services(TCS) have decided to defer variable payout to a section of its employees. Wipro will be delaying variable pay to its mid and senior-level executives for the June quarter, reportedly due to pressure on operating margins. Similarly, TCS has delayed the variable payout by a month for some employees for the June quarter. 

ALSO READ: No changes in salary increase, hike to be effective from Sept 1: Wipro

Influencing factors

Vijay Sivaram, CEO, Quess IT Staffing said various factors could have influenced the company’s decision, excessive or over-hiring in the last few quarters, looking to reduce talent costs, and overall global inflation-related downtime. “Companies are ensuring that the talent cost remains steady and does not continue to rise like it did last year as no organization can afford or take the risk of having higher talent cost,” he said. 

READ MORE: IT firms laid low by high attrition rate

“As some organizations have over-hired in the last few quarters, they have a workforce that is yet to be deployed to projects. It’s important to ensure that hiring talent doesn’t involve excessive spending. Concerns of global inflation-related downtime also persist for some companies,” he added.

Human resource consultants believe that this move wouldn’t see an instant reaction from the employees as the two companies are established, have a well-defined payment structure, and the amount maybe will eventually be paid.  

Rituparna Chakraborty, Co-founder and Executive Vice President of TeamLease, an HR services company said, “Employees would not pack up their bags just yet based on this announcement. However, it would be disappointing for them and they would be trying to find the rationale behind the move.” 

Sivaram said clear communication from the companies to its employees explaining the reason behind the delay would keep them from making assumptions. A greater impact on employees in the industry will be seen only if more organizations make similar announcements. “Although companies wouldn’t play around with the variable compensation, some companies could shadow the move made by the majors as it has happened in the past,” he said. 

Hiring to see moderation 

As the attrition has peaked, and cost is a concern, the hiring numbers going forward will see moderation. “Companies are looking into resource management internally to ensure that they hire only if necessary and the compensation hikes will also be moderated,” Sivaram said. 

READ ALSO: Q1 shows early evidence of muted IT deals

Moderation will only be seen in particular hiring skills. While hiring for ull stack development, analytics, and digital engineering will continue, moderation will be seen in hiring for application maintenance, package implementation, testing, and Java development. In addition to this, the strategy will also be changing as the focus will be shifting to deploying the already hired and trained workforce to projects. 

Published on August 22, 2022
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