For the first time in a decade, top 3 IT services firm see dip in headcount

Once a major force for offering employment in the country, IT services firms have seen a reduction in their workforce for the first time in at least a decade. Large Indian IT firms pruned their workforce during fiscal 2024 as business took a hit due to global slowdown in tech spends.

For instance, the largest Indian IT services firm Tata Consultancy Services, which has over 6 lakh employees, reported that its total headcount has declined by 13,249 in FY24. This is the first declined for the company in 19 years. Infosys and Wipro have also reported declining headcount.

Traditionally, these firms are characterised as mass recruiters in engineering colleges, a pit stop for young engineers to write basic code before they leave for other opportunities. 

But unlike global tech majors, Indian IT firms have not necessarily laid off employees. They have simply reduced hiring to levels that is lower than the number of employees leaving the companies.

• Also read: Wipro records 8% YoY profit decline at ₹2,835 crore in Q4 on weak demand

Key factors

As discretionary tech spend dwindled in FY24 following the collapse of the Silicon Valley Bank in the US – IT firms saw a suspension in ongoing tech projects. With associates sitting on the bench, IT firms chose to reduce hiring to limit costs. 

As a result, hiring has been muted for an uncharacteristically large time for IT firms resulting in them showing net negative employee addition four to six consecutive quarters for the first time in decades. 

• Also read: Infosys Q4 results: Are analysts not learning lessons or is the company faltering?

This trend is set to continue in the near term at least, as management has no visibility on when the discretionary tech spends will come back. TCS, which is the largest recruiter of engineers, has given an indication that hiring will follow the pattern of years before, giving no further commitments. TCS CHRO said in an interview, “We plan to hire 40,000 (employees) but where we will end up, we will know only in the next two months.”

Meanwhile, Jayesh Sanghrajka, CEO of Infosys, maintained that the firm would follow a more agile model of campus hiring while not deciding those numbers at this point. ““At this time, we have 82 per cent utilisation rate, we still have headroom to grow; and attrition levels are also very low. We have not yet decided on the campus hiring numbers at this point,” Sanghrajka added.

• Also read:Post Q4, analysts see small headroom for TCS

Job prospects

Given that no clear picture of discretionary tech spends returning has been formulated, dearth of jobs in the IT sector for engineers is expected to continue in 2025 fiscal too. 

Krishna Vij, Business Head, TeamLease Digital, told businessline that top IT services companies are approaching their FY25 hiring outlook cautiously, following recent headcount declines and lower revenue guidance in FY24. “Despite these challenges, record deal wins hint at potential future hiring needs. Companies note that clients expect transformation initiatives to be funded through operational savings, highlighting pressure on discretionary spending.

“However, optimism persists due to a robust deal pipeline from the previous fiscal year. With a focus on GenAI and data analytics, and training employees in these areas, there’s a move towards leveraging technological advancements to boost efficiency and offer value-driven solutions to clients,” Vij said.