IT major Tech Mahindra, a subsidiary of the Mahindra Group, will remove about 5,000 employees from its business process services (BPS) division as a larger part of the tasks get completed through automation and artificial intelligence. The BPS arm is set to bring down its headcount by 5,000 to 38,000 in the current financial year, PTI reported.
As per the company, there is a "non-linearity" between revenue growth and overall headcount as technology makes it possible for a single individual to accomplish multiple tasks.
Tech Mahindra announced the headcount reduction despite reporting strong earnings during December quarter of 2020. The Mumbai-based firm reported a 14.3 per cent rise in its consolidated net profit at Rs 1,309.8 crore in Q3 FY21 as compared to Rs 1,145.9 crore in the year-ago period. However, its revenue from operations was almost flat at Rs 9,647.1 crore in the quarter under review from Rs 9,654.6 crore in the year-ago period.
During the October-December quarter, Tech Mahindra witnessed a reduction of nearly 2,500 people in its overall headcount, while the BPS arm saw maximum job losses.
"What has happened is I used to have around 43,000 employees at the end of FY20, at the end of FY21, I expect about 38,000 employees in BPS. But that is because the productivity has increased and the revenue has also gone up," Tech Mahindra's chief executive and managing director C P Gurnani told PTI.
He, however, said the layoff may not continue in the forthcoming period and the headcount may stabilise, even as the revenues continue to grow. In the December quarter, the company had reported an 11 per cent growth in BPS revenue as compared to the preceding September quarter.
Tech Mahindra' President for BPS, Ritesh Idnani said automation, analytics and artificial intelligence have become very critical for a customer's operation, adding that the company is cannibalising its existing revenues through automation and delivering desired outcomes for the customers.
"As we deliver more on that, you will see that there is a non-linearity between revenue growth and headcount," he said, pointing out that the same trend has played out in December and September quarters, when the headcounts went down.
He said the BPS business is a robust one and the company is at present looking at its strongest pipeline of contracts ever as companies look at outsourcing more work.
With PTI inputs