 "In a first, IT services major Infosys sees a drop in net headcount")
Infosys’ headcount for Financial Year 2024 was down by 25,994 employees, making it the first-ever decline in headcount for the Bengaluru-based IT services major since at least 2001.
The total headcount for FY24 stood at 317,240, down 7.6 per cent from 343,234 employees in the previous year. On a quarterly basis too, Infosys added 5,423 fewer employees, a drop for the fifth consecutive quarter.
The attrition rate for Q4 was down 830 basis points to 12.6 per cent from 12.9 per cent in the preceding quarter, a trend seen across the IT services sector.
Infosys has been giving campus hiring a miss for at least the last four quarters, indicating that hiring has taken a slow lane at the company.
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The decline in headcount can be seen as an industry-wide trend. The headcount of its larger peer Tata Consultancy Services (TCS) too shrunk by 13,249 employees on a year-on-year (YoY) basis in FY24, for the first time in 19 years. On a quarter-on-quarter (Q-o-Q) basis, headcount was down by 1,759 employees.
It is believed that new technologies like artificial intelligence (AI) and generative AI (GenAI) could be among the factors for the decline in headcount. A senior Infosys executive recently said GenAI will bring in non-linearity in headcount growth and revenue in a few years.
“Incrementally, in the long run, we will need less talent. Non-linearity will start to come in. It’ll still take three to five years,” Satish HC, executive vice-president and co-head (delivery), told Business Standard in a recent interview.
Infosys has projected a revenue growth guidance of 1-3 per cent in constant currency for FY25.
Sanjeev Hota, Head of Research, Sharekhan by BNP Paribas said that Infosys’ lower-than-expected guidance for FY25 and declining headcount reflects weakness.
“In Q4, Infosys encountered a minor decrease in revenue, primarily due to a slowdown in discretionary spending and extended decision-making timelines by customers…On the people front, it has maintained their attrition rate. The current environment contributes to a more stable employee base and potentially reduces recruiting, retention, and subcontractor costs in the current environment,” Biswajit Maity, senior principal analyst, Gartner.