Leading Indian IT services companies, TCS, Infosys, and HCL Tech, have reduced hiring significantly in the December-ended quarter of FY 2022-23 as compared to the previous quarters. This is being attributed to seasonality in the business and several other factors as explained by the management of the various companies.
As per data compiled from earning reports, a broad consistency in decline of hiring across companies can be observed.
Tata Consultancy Services (TCS), which is India's largest IT services exporter, for instance, hired 7000 freshers in Q3 FY23 as opposed to 9840 in Q2 FY23. Infosys hired 6000 freshers in Q3 FY23, while it hired 10,032 in Q2 FY23. HCL Tech hired 5892 freshers in Q3 FY23, 2500 less than the Q2 FY 23 fresher hiring number.
The following reasons can be attributed to the slowdown in hiring:
Also Read: Infosys, TCS, HCL Tech: Fresher hiring drops across major IT companies in Q3 FY23 - BusinessToday
Increased bench size
Bench, in an IT company, refers to employees who are currently not on a project and hence have no deliverables. But these employees are still on the company's payroll. Companies maintain benches in case a new project shows up.
In the last few quarters, the bench size in IT companies has increased due to aggressive hiring, relative to reduced business requirements.
Nilanjan Roy, the Chief Financial Officer of Infosys, noted that in the December-ended quarter the company had the lowest utilisation rate of employees at 81.7, with a substantial number of employees on the bench.
He said during the earnings call, "We have a very substantial bench and I think our utilisation at about 81.7 is one of the lowest we've had. So, we have some headroom there."
Increased retention rate
The retention rate of employees has also gone up significantly as compared to the previous quarters. This has led to reduced lateral hiring of replacements.
Also Read: TCS headcount reduces for first time in 10 quarters; experts say indicator of slowdown - BusinessToday
Ramachandran Sundarajan, the Chief People Officer of HCL Tech explained during the company's Q3 earnings call: "The retention rate at HCL has increased. This coupled with reduced attrition has led to a reduced number of new hires."
The attrition rate at Indian IT majors has moderated over the last few quarters.
The attrition at TCS reduced marginally to 21.3 per cent in the December-ended quarter from 21.5 per cent which the compsny observed during the September-ended quarter. At Infosys, the attrition reduced to 24.3 per cent in Q3 FY23 as compared to 27.1 per cent from the previous quarter. HCL Technologies reported that the attrition rate stood at 21.7 per cent in the third quarter of FY 23, down from 23.8 per cent of the previous quarter.
Hence, as compared to previous quarters, companies have hired fewer people to replace the employees who voluntarily exited, in turn bringing down the number of new recruits.
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