INTERVIEW: Tech Mahindra CFO says lateral hiring will take time — and only after utilisation improves to pre-COVID levels

• Tech Mahindra will open up lateral hiring, but only after it brings its utilisation levels back up to pre-COVID levels.
• Tech Mahindra CFO told Business Insider that the company does plan on bringing new people on board based on demand.
• It also plans to reduce subcontractor costs by substituting them with its own employees.
• Check out the latest news and updates on Business Insider.

Most Indian IT companies have plans to open lateral hiring over the next three months, and so does Tech Mahindra, but not before it brings its utilisation levels back up.


Between April to June, the company’s utilisation — which measures the performance of employees — was down by 1%. “The first focus would be to bring that up and make it back to our levels, where we were a couple of quarters back,” Tech Mahindra’s CFO Manoj Bhat told Business Insider in an interview.


Tech Mahindra isn’t the only company dealing with a utilisation problem. Infosys saw an even bigger dip of 2.3% in the last three months. Analysts believe that more offshoring of deals will help the numbers come back up in the coming quarters.

Once utilisation jumps back up, Tech Mahindra plans to open up the doors to lateral hiring. Much of it will demand and which sectors it’s coming from. “I don’t think we’ll be hiring in advance,” explained Bhat.

Employee substitution
Aside from utilisation taking a hit, Tech Mahindra’s subcontracting costs were also higher between April to June. According to CFO Bhat, the sudden uptake is only due to the company’s latest acquisitions — Cerium and Zen3.

“In the longer run, subcontractor substitution by employees is what we’re thinking about,” said Bhat.

The company may not be using its employees most efficiently, but its attrition rate has continued to improve. It settled at around 17% in the first quarter, which is 2% lower than the previous quarter.

SEE ALSO:
INTERVIEW: Tech Mahindra wants 25-30% of its employees working from home permanently by June 2021 — CFO explains how they got to that number

Banks are spending a lot on tech but the money is not going to Indian IT biggies yet

Hiring at Infosys and Tech Mahindra is down at least 40% in line with the trend in top five IT firms⁠— and it's not just because of COVID-19