Sorry kids, Infosys and Wipro have cancelled graduate recruitment

India's big four outsourcers scored record deals in Q2, but revenue didn't reflect those successes

Infosys and Wipro have decided to skip hiring graduates this year as part of their "utilization optimization" strategies, after a quarter that brought both record deals amid continued macroeconomic uncertainty for India's big four IT services outfits.

The change in utilization and hiring reflects just how much things have changed in 18 months. In May of last year, one in five employees at India's top four IT outsourcers (Wipro, Infosys, TCS and HCL) quit in the previous year. Graduates were billed as the industry's savior.

Now, ".. we are not going to the campuses. We will monitor this every quarter, looking at our future predictions, and then finally decide when we do go back," Infosys chief financial officer Nilanjan Roy reportedly told analysts last week.

One financial analyst on Infosys's the Q2 call pointed out that headcount for the outsourcing giant has been down five percent over the past three quarters with utilization rates flat at 81.8 percent - meaning Infosys has about four days work for each employee, but pays for the full week.

Meanwhile, Wipro's utilization reached 84.5 percent. "We have taken several actions here from sustained bench reduction efforts, pyramid optimization to onshore offshore rationalization and rigor around subcontracting costs," stated Wipro chief operating officer Amit Choudhary.

Tata Consulting Services TCS chief of HR Milind Lakkad had better news for early career techies, saying his firm is committed to hiring 40,000 freshers in FY24.

HCL CFO Prateek Aggarwarl conceded [PDF] his business was hiring fewer people and not backfilling attrition, because of the freshers coming in. Total headcount at HCL dropped by 2,299 from the last quarter – to 221,139 – with plans to add 10,000 freshers.

TCS's last twelve-month attrition was 14.9 percent – down 2.9 percent sequentially. HCL attrition stood at 14.2 percent, Infosys at 14.6 percent and Wipro at a nine-quarter low of 13.4 percent.

Record deals among the four IT outsourcers were common. Infosys won its largest-ever deal, while TCS recorded its second highest total customer value metric at $11.2 billion. Wipro's large deals were up 79 percent year-on-year, although overall bookings were only up six percent. And HCL bookings hit a record high of $4 billion.

"Our pipeline continues to remain very strong. Obviously, it is not at the highest because we've got a tremendous booking last quarter, but it's probably maybe ten percent below our peak," explained HCL CEO C Vijayakumar. Despite such record deals, revenue stayed mostly stagnant. Constant currency revenue growth for TCS was at 2.8 percent year-on-year. HCL fared slightly better at 3.4 percent. Infosys experienced 2.5 percent revenue growth, while Wipro's decreased 0.1 percent year-on-year.

Revenues were reported at $7.21 billion for TCS, $4.718 billion for Infosys, $3.225 billion for HCL and $2.7 billion for Wipro. "There is an increased focus on cost optimization, which is causing our revenues not to increase in line with the increase in TCV," explained [PDF] TCS CEO K Krithivasan.

Execs from all four companies noted that customers were keeping an eye on discretionary spending.

"On the one hand, our customers continue to entrust us with the building of new technology capabilities and based on that, we continue to win new deals. But at the same time, given the overall market uncertainty, they are trying to conserve cash and optimize their current spend, particularly on projects that have been running for long," reasoned TCS's Krithivasan.

Generative AI is already driving business for the four companies.

Krithivasan said it was continuing to "drive client conversations."

Wipro CEO Thierry Delaporte observed that the technology was a part of every client conversation.

"As the technology evolves and Gen AI output becomes more accurate, we expect demand for our Gen AI services and expertise to increase greatly over the next six to 12 months," predicted Delaporte. ®

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