Top IT companies cut over 72,000 jobs in FY24

Once known for hiring hundreds of thousands every year, five of India’s top six information technology services companies reported a reduction of 73,600 in their total headcount in the last fiscal year
HCLTech, the third largest, was the only exception among the top six, as it added 1,537 employees in the year ended March 31, even as Tata Consultancy Services, Infosys, Wipro, Tech Mahindra and LTIMindtree reported a fall in their headcount. After accounting for the addition at HCLTech, the workforce of the top six firms fell by 72,063 .

A global slowdown in tech spending and uncertainty in the demand environment had hit India’s $254 billion IT services industry in FY24, leading to muted business growth and forcing companies to cut jobs and reduce hiring. In comparison, the top six IT companies had added more than 86,500 employees in FY23, driven by strong demand for their services immediately after the pandemic.

“In FY24, the headcount of the top three IT companies dropped by nearly 70,000, reflecting the aftermath of the excessive hiring during the Covid boom and the ongoing industry contraction in demand,” said Krishna Vij, business head for IT staffing at HR services firm TeamLease Digita.

“Factors contributing to this reduction include the economic slowdown, automation, restructuring, and decreased discretionary spending, leading to fewer deal wins and higher utilisation levels, resulting in lesser hiring,” Vij added. The headcount fell by 13,249 at market leader TCS and by 25,994 at Infosys, while Wipro reported a reduction of 24,516. The fifth largest software exporter, Tech Mahindra that released results on Thursday, reported a reduction of 6,945 in its headcount, while at LTIMindtree, the number fell by 2,896.

According to Kumar Rakesh, associate director, equity research at BNP Paribas, employee utilisation — percentage of employees assigned to projects — had dropped after the Covid period when these companies were managing high attrition and high demand through aggressive hiring.

“During FY24, when demand and attrition moderated, companies focused on pulling back up their utilisation. This resulted in headcount reduction across several IT services companies, even though their revenue grew during the year.”

Rakesh and Vij, as well as other experts, believe this may have bottomed out and that companies will resume hiring, given the strong deal wins announced by most of them could push a gradual pickup in growth. For instance, TCS and Infosys reported record-high deal wins in FY24 at $42.7 billion and $17.7 billion, respectively.