IT majors cut down hiring by half despite high attrition

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IT majors cut down hiring by half despite high attrition
There's a slowdown in hiring in the Indian IT sector even as attrition rates remain highBusiness Insider India
  • TCS, Infosys, HCL Tech and Wipro together hired 51% less employees in Q2.
  • Wipro’s net hires have fallen by 95% in the quarter.
  • This is despite attrition rates remaining elevated, with TCS reporting a sequential increase of 180 basis points during the quarter.
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India’s four major Indian IT companies have announced their Q2 FY23 results, with Infosys and Wipro reporting a moderation in attrition rates, but the largest of them all, TCS reported an increase.

While the demand and earnings outlook were amongst the key aspects of management commentary, attrition rates and employee additions were two other important metrics that stood out.

Top four Indian IT companies – TCS, Infosys, HCL Tech and Wipro – hired over 60,000 employees every quarter during FY22 on an average. This number was expected to come down as recessionary concerns gained momentum in the US and Europe – the two key markets of the Indian IT sector.

And, it’s now starting to reflect in how many employees are being hired by IT companies.

According to an analysis by Business Insider India, TCS, Infosys, Wipro and HCL Tech hired 51% less employees in Q2 FY23 than the average of the previous five quarters.

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IT majors cut down hiring by half despite high attrition
Indian IT sector net hires FY22 to Q2 FY23Business Insider India / Flourish

On an average, amongst themselves, these four IT companies hired 59,220 employees per quarter since the beginning of FY22.

In Q2 FY23, that number has come down drastically to just 28,836.

From their respective averages, TCS hired 58% less employees, Infosys hired 34% less employees, while Wipro’s net additions were down by a massive 95%. HCL Tech was the only outlier, with a 0.5% decline in its net additions.

CompanyQ2 FY23Average (prev 5 quarters)Absolute change% change
TCS9,84023,536-13,696-58%
Infosys10,03215,113-5,081-34%
HCL Tech8,3598,398-39-0.5%
Wipro60512,172-11,567-95%

Source: Company reports

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It’s not just a slowdown in hiring, IT companies have been reportedly delaying onboarding of freshers – this includes Infosys, Wipro, HCL Tech and Accenture. Some candidates have been waiting for a year to receive their joining letters, the report added.

During its Q2 earnings, TCS said it honoured all job offers in the first half of FY23 with the addition of 35,000 freshers on its roster.

Attrition rates remain elevated



Despite the drastic decline in the pace of hiring, attrition rates continue to remain elevated. In fact, it worsened for the market leader TCS, while remaining unchanged for HCL Tech, and moderating for Infosys and Wipro.

IT majors cut down hiring by half despite high attrition
Attrition rates FY22 to Q2 FY23Business Insider India / Flourish

Infosys, the second largest Indian IT company is the worst affected with its attrition rates still significantly higher than its peers.
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It is attrition rates and not the wage hikes dampening Indian IT cos earnings

It is attrition rates and not the wage hikes dampening Indian IT cos earnings

Three out of four major Indian IT companies have announced their Q2 FY23 results. While the demand and earnings outlook were amongst the key aspects of management commentary, attrition rates and employee additions were two other important metrics that stood out. Top four Indian IT companies – TCS, Infosys, HCL Tech and Wipro – hired over 60,000 employees every quarter during FY22 on an average.

IT companies develop an allergy to moonlighting



Softening demand outlook and growing attrition rates seem to have contributed to IT companies developing an allergy to moonlighting – while Wipro’s Rishad Premji was the only major executive to have publicly spoken out against moonlighting until recently, TCS and HCL Tech too have now joined the chorus.

TCS’ HR head Milind Lakkad called it an ‘ethical issue’, while HCL Tech said it does not approve of moonlighting.

Wipro’s Premji, on the other hand, called it “plain and simple cheating”.

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The only major exception until now is Tech Mahindra’s MD and CEO CP Gurnani.

IT companies right now are staring at a potential softening of demand, which is beginning to reflect in their hiring strategies too. With experts suggesting attrition rates will start tempering by the end of this year, it remains to be seen if companies ease on moonlighting or not.

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HCL Tech’s net profit rises 6.3% sequentially, company increases FY23 revenue guidance

Wipro Q2 net profit rises 3.7% to ₹2,659 cr sequentially, but isn’t as optimistic about Q3
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It is attrition rates and not the wage hikes dampening Indian IT cos earnings

It is attrition rates and not the wage hikes dampening Indian IT cos earnings

Three out of four major Indian IT companies have announced their Q2 FY23 results. While the demand and earnings outlook were amongst the key aspects of management commentary, attrition rates and employee additions were two other important metrics that stood out. Top four Indian IT companies – TCS, Infosys, HCL Tech and Wipro – hired over 60,000 employees every quarter during FY22 on an average.