IT jobs FY24 review: Headcount crashes by 63,759 in TCS, Infosys, and Wipro; attrition down sequentially

The IT majors also reported a sequential decline in attrition rates, painting a grim picture for employment and hiring trends amid weak global demand and falling discretionary spending. The major trend observed in the three tech giants has been the full-year drop in headcount for the first time historically.

Also Read: Wipro Q4 Results: Large TCV up 9.5% YoY, Q1FY25 revenue guidance pegged at -1.5 to 0.5%; 5 key highlights

Market analysts said that the current macro environment is unfavorable for software service exporters, which has resulted in softer numbers of tech majors in the quarter ended March 31. Let’s take a glance at the latest quarterly numbers of TCS, Infosys, and Wipro along with their headcount figures:
 

TCS:

India’s largest software services exporter reported a nine per cent rise in net profit at ₹12,434 crore, compared to ₹11,392 crore in the corresponding period last year. The IT major’s revenue from operations in the fourth quarter rose 3.5 per cent to ₹61,237 crore, which missed D-Street estimates.

TCS reported a decline in full-year headcount for the first time in 19 years since the tech giant was listed in 2004. The FY24 headcount dropped by 13,249 employees and the total workforce stood at 6,01,546 employees as of March 31. On a sequential basis, the headcount declined by 1,759 employees in January-March 2024, reporting a drop for the third consecutive quarter.

The attrition rate declined to 12.5 per cent in the March quarter compared to 13.3 per cent from the preceding December quarter. The IT major’s annual increments for its workforce stood in double digits for its top performers.

Infosys:

India’s second-largest IT major’s net profit rose 30 per cent to ₹7,975 crore in the March quarter, compared to ₹6,134 crore in the corresponding period last year. Total revenue for the quarter under review stood at ₹37,923 crore, rising 1.3 per cent YoY. Infosys slashed its revenue guidance for the fiscal 2025 to 1-3 per cent from 4-7 per cent from a year ago, amid uncertain demand conditions. 

Infosys reported a decline in full-year headcount for the first time in 23 years since 2001. The FY24 headcount dropped by 25,994 and the total workforce stood at 317,240– a 7.5 per cent drop annually. On a sequential basis, Infosys reported a drop for the fifth consecutive quarter with 5,423 fewer employees.

The attrition rate declined to 12.6 per cent in the March quarter compared to 12.9 per cent in the preceding December quarter. Infosys has skipped campus recruitments for the past three quarters as its hiring model has changed. It no longer hires freshers from campus but focusses on off-campus recruitments.

Wipro:

India’s fourth-largest software services company reported a decline of eight per cent in consolidated net profit at ₹2,835 crore, compared to ₹3,074.5 crore in the corresponding period last year. Wipro’s revenue from operations for the March quarter also dropped four per cent to ₹22,208.3 crore, which beat expectations aided by firmer profit margins and strength in healthcare business.

Wipro reported a decline in full-year headcount for the second consecutive year. The FY24 headcount dropped by 24,516 employees and the total workforce stood at 2,34,054 employees at the end of March 31, 2024. In the March quarter, the headcount dropped by 6,180 employees. Wipro’s attrition rate remained flat at 14.2 per cent on the last-twelve-month (LTM) basis.

Hence, the total decrease in headcount numbers of all three IT companies for FY24 comes out to be 13,249+25,994+24,516=63,759.

Also Read: Infosys Q4 Results: At 7.5%, full-year headcount drops for first time in 23 years; attrition down 12.6% QoQ
 

Sector Outlook

Market analysts expect the IT companies to witness some near-term weakness in revenue growth, but the strong order book will support the growth prospects in the current FY25. The outlook for FY25 is stronger compared to the previous fiscal, according to several brokerages. 

Commenting after Infosys Q4FY24 performance, Pritesh Thakkar, Research Analyst, Prabhudas Lilladher said, ‘’We believe the company’s meaningful dependency on discretionary spends is leading to execution challenges and affecting its near-term growth.” 

‘’The project re-scoping and negotiations have again created a knee-jerk reaction to its executions and deliverables. We believe the current macro environment is not favoring its service mix, leading to create near-term leakages, otherwise the long–term story remains intact,” added Thakkar.

Market analysts also said that Wipro has been slow in ramping up deals and converting them to revenue, which the company won in the previous quarters and challenges in employee retention and satisfaction are a big part of it.

Also Read: Wipro MD Thierry Delaporte resigns, Srinivas Pallia to succeed as CEO

‘’The new CEO has in front of him a mountain of uncertainties which we expect won’t be easy to climb at least until Q2FY25 when we expect the discretionary spending to pick up. The outlook on client budgets in FY25, the consulting business, the ramp-up of old deals and new and large deal pipeline trajectory will be watched closely,” said Dhruv Mudaraddi, Research Analyst, StoxBox.

On the reduction in the overall headcount numbers, market analysts believe that the rush to hire employees has cooled down as clients are cutting on extra spends and delaying projects and hiring models are evolving.

‘’One witnesses a sequential fall in attrition rates across the tech sector. Similarly there is also a reduction in headcount for most companies that have declared the results so far. Both indicators show that the exuberant rush to hire employees have cooled off as their clients are cutting down discretionary spends and deferring projects,” said Kaushik Dani Fund Manager – PMS, Abans Investment Managers.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.

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Published: 20 Apr 2024, 06:14 AM IST