GenAI will impact headcount growth in next 3-5 years: Infosys executive

The current headcount fall at large Indian information-technology (IT) players has been due to growth slowing, and in the long run companies will hire fewer people, said a senior executive of Infosys.

Satish H C, executive vice-president and co-head (delivery), is of the opinion that newer technologies like generative AI (artificial intelligence) 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,” he told Business Standard.

A reason will be technology, he added.

“In a couple of years we will grow with a lower headcount. With all the technology enhancement, cognitive automation does a lot of heavy lifting and becomes easier to do in volumes,” he said.

He also added traditional productivity gain per year in the tech services business, using classic automation, used to be 5-10 per cent.

“But if you have the right foundations and the right maturity for certain kinds of use cases and nature of work, it can be many times higher.”

The headcount of Infosys, the second-largest Indian IT services firm, was 322,663 in the third quarter of FY24. It had fallen by over 6,000 people sequentially and was down 24,182 year-on-year.

Satish said the current headcount drop had nothing to do with generative AI. He attributed it over-hiring the company did in the past one year, apart from slowing growth. He added the company was still sitting on the excess headcount but was looking to optimise this over the next few quarters.

He said even though generative AI would impact headcount, it would also aid in growth. “Today we are only doing software engineering. We can do much more…We will probably see a larger foray from us into engineering research and development, and industrial manufacturing,” said Satish.

When asked about the impact on business due to  generative AI , Satish said many clients were looking at more than building efficiency by using this. “For one of the clients, we are starting to generate marketing content, which used to be done by highly paid agencies. If creative jobs can get disrupted, then left brain jobs like coding are easily disrupted. We are going through the journey of huge disruption,” he added.

Infosys, which has stated it will be an AI-first company, is bracing itself for this disruption.

“We did a major restructuring in May-June. We had two-three months of AI first under our belt. One of the things we realised is that if this has to succeed, AI needs to be democratised within Infosys,” he added.

“We saw three dimensions  —  one, new offers; two, make existing offers efficient and run faster and more energised; and finally optimisation. There’s also an opportunity for us to optimise and enhance margin,” said Satish.

The upcoming CXO meet of Infosys leaders in Goa will evaluate this restructuring and how it has changed Infosys, he said.

“One aspect of this is more about internal processes and technology, etc, but the other is how we are transforming our services. Traditionally, we built our AI business for solving clients’ business problems. That will continue. But we’ve taken a large chunk of this capability now and said we should transform infrastructure management, BPM (business process management) services, application development and maintenance, etc,” he added.

Though Satish is bullish on AI adoption, he cautions this will take time to scale up. “First, we need to put certain foundations in place — regulations and laws that govern this. Second, the cost,” he said.

“If you have the right foundations in place you can make the return on investment work. Otherwise, the cost is going to be prohibitive.”