IT services company Tech Mahindra reported a big miss in earnings for the April to June 2023 quarter and like its peers, it also saw a reduction in its total employee headcount. The firm's headcount slipped by 4,103 employees in the first quarter of the fiscal year. This, however, was slightly less than the drop of 4,688 in the previous quarter.
This is the third quarter in a row that the number of employees has gone down at the tech company. Emkay Global Financial Services points out that the firm has seen staff decline by 10 percent in the last three quarters.
Tech Mahindra's peer Infosys saw a net reduction of 6,940 employees, while the figure stood at 8,812 for Wipro and 2,506 for HCL Tech. Tata Consultancy was the only one among the top five to have added (net) 523 employees during the quarter.
Following the results, CP Gurnani, MD and CEO of Tech Mahindra, said, "Our
results this quarter reflect the uncertainty in the global economy and the IT sector. We are confident that we have the right strategy and the right team to overcome this temporary setback and deliver long-term value for our customers and shareholders."
His remarks come as the company’s margin came in 440 basis points lower than estimated by a CNBC-TV18 poll of analysts. It was down at 6.8 percent from 11.2 percent in the previous quarter.
Brokerage firm Nomura has pointed out salary hikes, apart from provisioning and revenue decline, as one of the factors leading to a margin miss. This comes as most tech firms announce their salary hikes in the June-end quarter. However, it is not clear what was the average increment given to employees.
As per the company’s annual report for the previous fiscal year i.e. 2022-23, employees were given an increase of 6 percent in their pay package (including those overseas). In the same time period, the remuneration of managerial personnel had decreased by 41 percent. However, if the stock options exercised part is removed, then the managerial pay did not decrease.
