Employee costs in IT touches five-year high: Report

IT industry hiring has taken a hit as companies like TCS, Wipro, and HCL Technologies are looking to cut down on employee expenses, a Mint reported.

The analysis has also revealed that in first-quarter of the 2023 financial year, employee costs as a percentage of total revenues has increased to a five-year high. This has prompted the three aforementioned companies to keep their hiring targets at a minimal for the time being.

Poor deal pipelines and weak visibility in the near future are behind this decision by the Indian tech giant.

In the last eight financial quarters, TCS' year-over-year increase in employee costs has overtaken its revenue growth five times. While for HCL, the same has happened on seven occasions, it has been Wipro's fate for eight times.

Attrition rates of all three companies fell during the April-June fiscal quarter.

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“We’ve been able to streamline operations, reduce number of overheads, just remove some of the layers of unproductivity," revealed Wipro CEO Thierry Delaporte to the publication.

Recruitment data indicates that employment policies are now conservative, which have taken campus recruitment. TCS had a slight increase in staff strength as a result of rising employee costs, with 523 new hires as opposed to 821 in the previous quarter. TCS's chief human resource officer, Milind Lakkad, stated on July 13 that the company will continue to add fewer net employees during the current fiscal year.

HCL has also seen a decline of 2,506 employees sequentially, but has recruited around 1,597 freshers. This is a sharp fall from 4,480 new recruitments in Q4FY23.

“The impact will be on variable pay, delays in mandate closures and focus on employees with niche skills. We do not expect the recruitment pace to pick up in this sector over the next couple of quarters," CIEL HR Services' CEO Aditya Narayan Mishra revealed to the publication.