Tech Jobs, IT Firms, And Workforce Reductions Highlights So Far

It has been a challenging couple of months when it comes to employment rates, with many companies across industries being obliged to cut workforce due to factors related to geopolitical tensions and winds of recession.

One industry that has been majorly impacted other than startups is India’s leading IT giants; three significant players in India’s IT sector, namely TCS, Infosys, and Wipro, observed a notable decrease in their combined workforce, totalling almost 64,000 employees by the end of the financial year in March.

IT major Infosys‘ headcount declined to 25,994 during the financial year 2023-24. This is the first time in at least 23 years since 2001 that the headcount has dropped in a full financial year.

The outlook for the current fiscal year also appears bleak, with Infosys projecting a modest revenue growth of 1% to 3% for the entire year, while Wipro anticipates a potential revenue decline of 1.5% in the June quarter, with a slim chance of a 0.5% increase. 

These developments have equally raised concerns for engineering graduates seeking opportunities in the sector, with the official figures for campus placements also showing remarkable downside.

A Glimmer Amidst The Gloom, Tech Jobs

Despite these challenges, there is a glimmer of hope as global capability centers (GCCs) of multinational corporations continue to expand their presence in India, contributing to employment opportunities in the tech sector. 

The emergence of new GCCs in the country has been a significant driver of hiring in the industry, a trend that is expected to persist in the coming year. 

What Are Experts Saying 

Peter Bendor-Samuel, CEO of IT consulting firm Everest Group, states that the reduction in headcount is a result of the industry’s corrective measures following the excessive hiring spree during the Covid pandemic and the ongoing contraction in demand. 

While the US economy remains robust, TCS CEO K Krithivasan notes that US enterprises are apprehensive about a possible economic slowdown or recession, impacting their IT investment decisions.

Likewise, Saurabh Govil, Wipro’s Chief of HR, attributes the decrease in headcount to both the demand environment and enhanced operational efficiency, resulting in the need for fewer personnel. 

Similarly, Jayesh Sanghrajka, Infosys CFO, identifies shifting demand dynamics over the past year as a contributing factor.

Phil Fersht, CEO of US-based IT advisory HfS Research, introduces another aspect, emphasizing the influence of Gen AI in reshaping IT staffing requirements. 

He cites an example of a major US enterprise reducing its IT workforce by utilizing large language models for application testing, potentially phasing out a significant portion of routine-based testing and coding roles in the upcoming years.

Infosy’s Major Drop

In a notable development, Infosys‘s headcount fell by 25,994 in FY24, marking the first yearly decline since 2001. 

As of March 31, 2024, Infosys’ total headcount stood at 317,240, reflecting a 7.5 percent decrease compared to the previous year’s total of 343,234 employees. Additionally, the headcount as of December 2023 was 322,663.

Quarter-on-quarter, Infosys also experienced a reduction of 5,423 employees, marking a decline for the fifth consecutive quarter.

However, its attrition rate over the last twelve months declined to 12.6 percent, compared to 12.9 percent in the previous quarter.

On Thursday, IT giant Infosys reported a 30 percent year-on-year increase in its net profit to Rs 7,969 crore for the fourth quarter ended March 2024. 

Nevertheless, its revenues during January-March 2024 only saw a 1.3 percent year-on-year rise to Rs 37,923 crore, compared to Rs 37,441 crore in the previous year.

Infosys’ net profit for the corresponding quarter of the previous year stood at Rs 6,128 crore. 

Year-on-year, Infosys’ revenue dropped by 2.3 percent during the March 2024 quarter to Rs 37,923 crore, against Rs 38,821 crore in the preceding December 2023 quarter. Its net profit saw a 30.5 percent sequential increase.

Meanwhile, commencing the Q4FY24 earnings season, India’s largest IT services company TCS reported a 9.1 percent growth in its March quarter net profit to Rs 12,434 crore on April 12. 

For the fiscal year 2023-24, the company’s net profit increased by 9 percent to Rs 45,908 crore, as per an exchange filing.

The Vicious Cycle, Viewpoint

The confluence of a drop in headcount, widespread hiring freezes across numerous companies, and escalating geopolitical tensions has created a daunting scenario for individuals seeking employment, particularly amidst persistent inflationary pressures.

Firstly, the reduction in headcount and hiring freezes signal a tightening job market, making it increasingly challenging for job seekers to secure employment opportunities. With fewer positions available and limited hiring activity, competition among applicants has intensified, worsening the already fierce job market dynamics.

Moreover, geopolitical tensions has further complicated the employment scenario, uncertainty stemming from geopolitical conflicts can disrupt global trade, investment flows, and business operations, further dampening job prospects and leading to workforce downsizing and retrenchment.

The Pressures

In this volatile environment, individuals searching for employment face heightened financial strain due to inflationary pressures. 

For example, rising inflation erodes purchasing power, making it more challenging for individuals to meet their daily expenses and financial obligations. 

As prices for essential goods and services climb, households may be forced to tighten their belts, aggravating economic hardships.

These factors create a “deadly melting pot” for job seekers, characterized by heightened competition, limited opportunities, geopolitical uncertainties, and economic pressures. 

The Last Bit, indeed, the combination of these factors paints a challenging picture for employment rates and it may be a while before the road to recovery is seen.