India's largest IT services provider, Tata Consultancy Services (TCS) has onboarded 43,000 fresh engineering graduates and has made them industry ready by training them, essentially to mitigate the challenges posed by rising attrition levels. TCS, however, has not been immune to what is now the growing concern across the $190 billion IT industry in India - voluntary employee exits. The attrition level for Q2 (July-September) FY22 was reported at 11.9 per cent, compared with 8.6 per cent during the last quarter. The company is also aiming to double down on its hiring target and is likely to hire 78,000 employees in FY22.
TCS' Chief Human Resources Officer, Milind Lakkad described the attrition levels as concerning and it is likely to continue for the next two-three years. He said that the company has embarked on a robust talent acquisition model to keep the supply ready even as the lateral hiring costs have risen. Lakkad added that the freshers were hired over the last few quarters. In Q2 of FY22, the company added 19,690 employees.
The top executive was responding to a question on whether the talent acquisition in a strong demand environment will be a costly affair, especially with remunerations being offered by start-ups, and Global In-house Centres (GICs) being reasonably higher.
Industry analysts say that India's IT industry may face a talent crunch to deliver on large projects and that could impact their profits.
The Mumbai-headquartered company, however, reported a strong growth in its net profit which increased by 14.1 per cent year-on-year to Rs 9,624 crore, whereas the revenues grew by 16.8 per cent year-on-year to Rs 46,867 crore The operating margin contracted by 0.6 per cent year-on-year at 25.6 per cent on the back of rupee consolidating against dollar as well as talent acquisition and retention costs. The company has also announced a dividend of Rs 7 per share for the September quarter.
The deal signings for the quarter were worth $7.6 billion, coming from a healthy mix of large and small contracts.
"The strong and sustained demand environment is a once-in-a-decade opportunity to position ourselves as the preferred growth and transformation partner for our customers. We are using the growth tailwind to invest in strengthening relevant capabilities and building out a comprehensive portfolio of offerings that caters to a broader set of stakeholders in the enterprise across business cycles, strengthening our brand, and making our business more resilient. We believe this is the most sustainable pathway to create longer term value for all our stakeholders," said Rajesh Gopinathan, Chief Executive Officer and Managing Director.
India business recovers
In its domestic market India, where TCS reported a net loss of Rs 350 crore in the last quarter, the company said that it has seen a healthy growth especially with the impact of Covid-19 receding.
Ganapathy Subramaniam, Chief Operating Officer & Executive Director, TCS pointed out that a majority of the deal wins in India, and in the overseas markets like North America and Europe have come from the SaaS business model.
"In India we have seen a holistic growth during the September quarter exacerbated by the growing digital stack which includes our engagements in financial services sector, EV industry, automotives, etc," he added.
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