The hiring frenzy is over at India's services giants

Headcounts are down for the first time in ages, margins are up, and CEOs are happy

When India's top four outsourcers – Wipro, HCL Tech, Infosys and Tata Consultancy Services (TCS) – announce their results, they often mention plans to hire thousands of new workers to both grow headcount and replace departed workers. But across 2023 and into 2024, that changed.

In FY2024 results announcements made across the last two weeks, Wipro revealed a net decrease in 24,516 employees, Infosys shed 25,994, and Tata Consultancy Services farewell 13,249. HCL Technologies bucked the trend by adding employees – but just 1,537.

Nonetheless, HCL celebrated the win.

"In terms of people, our headcount ramp up continues," declared [PDF] HCL Technologies CEO C Vijayakumar last Friday.

TCS chief HR officer Milind Lakkad poured on the buzzwords [PDF], explaining that his business was continuing to "recalibrate our lateral hiring focusing more on utilizing the capacity that we have built over the prior years."

Infosys CFO Jayesh Sanghrajka explained [PDF] that utilization rates – the amount of time a consultant works on client projects – had increased from 77 percent at the start of the year to 82 percent. "Our attrition has also come down significantly. So that is the reason why you see a net headcount reduction," he noted.

Wipro's chief of human resources Saurabh Govil cited [PDF] "operational efficiency" as the driving force, and argued that utilization was at an all-time high in the quarter.

Govil claimed that the industry had over-hired at some point post-COVID. "So, we just want to be more cautious, more judicious and as we move forward. But as demand environment improves, we don't see a challenge," he added.

FY2022 saw India's IT outsourcers clamoring for employees as the last twelve-month attrition rate averaged at above 22 percent. Graduate recruits were billed as the answer, and the big four cracked down on their staff moonlighting for rivals or startups.

But by May 2023, hiring had slowed. In that year Wipro and Infosys went as far as to cancel graduate recruitment. Freshers at Wipro that had offers were even encouraged to take a lower salary than first offered.

But now, as margins thin, the industry has turned to headcount and utilization as levers it actually can control.

Despite its employee decrease, TCS reported an order book that sat at an all time high of 42.7 billion. It was the only one of the four that didn't report thinning margins as it steadily grew from 23.2 percent in Q124 to 26 percent in Q424.

TCS CEO K Krithivasan declared the biz was "quite happy with the total contract value" but cautious due to headwinds and short-term volatility. "What we have not been able to predict is the headwinds that come out because customers want to conserve cash and then stop some of those ongoing large programs," he explained.

Meanwhile, Infosys went from a Q124 20.8 percent margin to 20.1 percent in Q424. Wipro moved from 16 percent in Q124 to 16.4 percent in Q424. "On a full year basis, our margins are at 16.1 percent; they have improved by 50 basis points year-on-year," revealed Wipro CFO Aparna Iyer.

Large deal bookings of $1.2 billion for Wipro were up over 30 percent quarter-on-quarter and 9.5 percent year-on-year. However, the outsourcer did experience a decline in revenue of 6.6 percent year-on-year.

HCL Technologies' pipeline also improved. New deal wins sat at $9.759 billion – an increase of 10 percent year-on-year. ®

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