L&T Infotech says will continue with fresher hiring, but level of scrutiny to go up

Plans acquiring consulting firms with to boost revenue productivity

L&T Infotech, a midsize information technology (IT) services company and a subsidiary of Larsen and Toubro says that it would continue to hire freshers from campuses even though there will be a significant focus on improving the quality of hiring. This is predominantly happening because of the shift in the client environment with demand and supply mismatch which is making the clients to look for best talent to work for their projects, according to Sanjay Jalona, CEO and MD of L&T Infotech.

In June this year, the Mumbai-headquartered company had revoked the selection of hundreds of campus recruits after they failed to qualify a subsequent round of test even after obtaining their offer letters. The company subsequently had clarified that these campus recruits were given letter of intent and not offer letters, and the changes were made due to a demand supply mismatch that it did not anticipate earlier.

"Technology innovations are happening very very quickly and the last three years have been remarkable. The kind of talents and capabilities that are required to cater to our customers today has changed dramatically. We will continue to hire in the market place, but we will hire the best in the industry," Jalona told Business Standard.

Besides, another thing, he said, that is triggering this higher benchmark for selecting tech talents is, dwindling demand environment. Especially when the demand is scarce and there are 10 vendors that are fighting for the same business, the customers also wants to give work to the player who has the best talents.

"The important part is that the demand (from the customers) has dramatically changes. Customers are asking for these standard tests and you have to make sure that you have the best people doing it." Another reason why L&T will have to continue with hiring freshers is that the ratio of its employees who are in zero to three years experience is around 30 per cent now as compared to around 35 per cent in the industry, said Jalona who joined L&T Infotech from larger rival Infosys in August last year.

"This (increasing the mix of freshers) is one of the margin levers that I have; so I will hire freshers, but given the demand we have in the industry today that quality of people has to improve." In order to ensure that, L&T Infotech is refining the way it engages with the campuses for recruitment. This means going forward, the company would go to fewer engineering colleges "to cater to the quality needs" it has.

According to Jalona, the quality of talents the company has will also help in improved employee productivity and quality of revenue. The per capita employee productivity of L&T Infotech, according to the company, stands around $45,000 ($50,000 for billable employees) which is one of the best in the industry, expect for couple of larger rivals who have a higher degree of consulting revenue mix. One of the many initiatives that the company is planning to undertake is to strengthen its consulting practice inorganically which could result in fetching steady downstream revenues.

"There are only two companies who have higher revenue productivity than us, but there is some potential to improve it," Jalona said. "One of the acquisition targets for us is front-end consulting companies and the minute you have that, your revenue productivity automatically jumps in so also your margins."