This Indian IT services firm is the only one among top four that wants to increase headcount in Q4

Tata Consultancy Services (TCS), Infosys, HCLTech and Wipro — India’s top four IT services firms (by market capitalisation) — have witnessed an overall decline in the total employee strength for the past three consecutive quarters. The trend continued for the fourth quarter, that is the October to December 2023 period. But, HCLTech stands out.

The situation seems to have improved as the four companies together saw a net reduction of 12,637 employees in the third quarter of the financial year as compared to a net reduction of 21,213 staffers in the quarter ended September 2023.

However, while TCS, Infosys, and Wipro saw their workforce decline by 5,680, 6,101, and 4,473 staffers, respectively, in the quarter under review, HCLTech’s employee strength increased by 3,617.

Not only does HCLTech expect net headcount addition in the January to March 2024 quarter, it even expects increased hiring in the market given the demand uptick, the Noida-headquartered firm’s Chief People Officer Ramachandran Sundararajan said after the firm announced quarterly earnings.

“Attrition has come down, and hiring activity in the market has come down. But HCLTech has bucked the trend… Looking ahead to the next quarter forecast for the services business, we expect a net headcount increase, which means we expect to see an increase in the recruiting activity both in terms of fresher addition as well as lateral hiring,” Sundararajan told CNBC-TV18 in an exclusive interaction.

His remarks are in contrast to TCS’ management commentary. TCS chief human resources officer (CHRO) Milind Lakkad said he won’t be surprised if the headcount moderates further. However, when asked about campus hiring, Lakkad said the company is hiring for FY25 and that campuses are buzzing.

Infosys had said in the previous quarter that the firm was not looking to make fresh campus hires yet.

On the other hand, Sundararajan is also seeing an increase in compensation and believes that if the trend at HLCTech continues, the supply side will also start stabilising. He said the skills in demand are also shifting and for the new skills, the compensation levels are also expected to increase.

Last week, TCS’ Lakkad, when asked about low fresher salaries, had said that if freshers or existing employees are willing to upskill, they can earn double and for some skills salaries go up to ₹10 lakh.

To be clear, declining hiring numbers do not necessarily mean companies are laying off or not hiring at all but that the number of exits is higher than the number of people being hired. It implies “net reduction”.

Also, it must be noted that the reduced or negative hiring numbers come alongside easing attrition levels at the IT services giants. While HCLTech said, its attrition has slipped to 12.8%, the lowest in seven years, Wipro, too, said it eased to 14.2% for the December quarter to a 10-quarter low.

Reflecting on the outlook for 2024, Sashi Kumar, Head of Sales, Indeed India, said a notable development in the IT landscape has been the rise of Generative AI.

“Over 27% of employees now possess Generative AI skills, with 59% expressing high confidence in using AI tools. This signals a likely widespread integration of AI in workplaces in 2024. As we enter 2024, the importance of embracing new technologies and upskilling remains paramount for IT companies,” he told CNBC-TV18.