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The information technology (IT) services sector, after having remained India’s largest private sector employer for decades, is set for a change. Several big companies have begun to downsize operations and go slow on fresh hiring, as a result of increasing automation.
Several multinational companies have downsized Indian operations. Three of India’s largest IT services companies — Tata Consultancy Services (TCS), Infosys and Wipro — have either remained slow in hiring in recent years, hinted at bottom fishing for workforce or ‘restructured’ senior-level staff.
According to sectoral body Nasscom, the IT and business process management (BPM) sector employs 3.1 million people, including around one million women. At the end of July-September, TCS had a headcount of 313,757, while Infosys and Wipro employed 165,411 and 154,297, respectively.
With automation having increased over the past few years, experts estimate an IT services company requires only 13,000 employees for $1 billion revenue, half the number needed until a couple of years ago.
“The use of productivity tools and with a substantial part of the business going on the cloud, most IT companies no longer require the number of people they once used to,” said Krish Lakshmikanth, founder and chief executive officer and chairman of Headhunters India. “The pace of hiring has been declining in the past few years and will definitely become slower. At the fresher level, students will need to look at software products or e-commerce companies for jobs because I don't think the IT services sector will be able to absorb students beyond the top 200 colleges.”
In 2012-13, Infosys had said it would hire 6,000 graduating students, a sharp drop from 19,000 the previous year. For 2013-14, the company pegged hiring at 15,000-16,000, a pale shadow of 50,000 used to take every year during its heydays.
Wipro does not share annual hiring figures but Chief Executive Officer T K Kurien has said the company aspires for a high growth level like that of TCS. But with a lower headcount. “Large numbers of people are the biggest worry for us because we believe that at some time, you will hit an upper limit. So, our target is to reach good performance but with the highest level of automation,” Kurien had said in an earlier interview to Business Standard.
Despite slow hiring by Infosys and Wipro, India’s largest IT services company, TCS, has continued recruiting in bulk from engineering colleges all these years.
Last week, sources said, TCS was undergoing a restructuring exercise, expected to finish by February. All verticals have been asked to identify senior staff above the rank of consultant — senior consultant, principal consultant, vice-presidents — who have not been very productive.
Middle-management trimming could become the norm for several other companies, experts said. Lakshmikanth added mid-level employees overseeing operations were facing redundancy from automation.
“I remember, almost a year ago, several CEOs of the IT services industry were openly discussing if they needed people with 20-25 years of experience because people with 10 years’ experience are capable of handling these responsibilities,” said Sudin Apte, research director and chief executive officer at Offshore Insights. “Either senior-level skills do not matter now in the changing nature of technology or the senior level is more into management of client relations and technical expertise is required at less experienced levels.”
Several multinational companies have downsized Indian operations. Three of India’s largest IT services companies — Tata Consultancy Services (TCS), Infosys and Wipro — have either remained slow in hiring in recent years, hinted at bottom fishing for workforce or ‘restructured’ senior-level staff.
According to sectoral body Nasscom, the IT and business process management (BPM) sector employs 3.1 million people, including around one million women. At the end of July-September, TCS had a headcount of 313,757, while Infosys and Wipro employed 165,411 and 154,297, respectively.
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With automation having increased over the past few years, experts estimate an IT services company requires only 13,000 employees for $1 billion revenue, half the number needed until a couple of years ago.
“The use of productivity tools and with a substantial part of the business going on the cloud, most IT companies no longer require the number of people they once used to,” said Krish Lakshmikanth, founder and chief executive officer and chairman of Headhunters India. “The pace of hiring has been declining in the past few years and will definitely become slower. At the fresher level, students will need to look at software products or e-commerce companies for jobs because I don't think the IT services sector will be able to absorb students beyond the top 200 colleges.”
In 2012-13, Infosys had said it would hire 6,000 graduating students, a sharp drop from 19,000 the previous year. For 2013-14, the company pegged hiring at 15,000-16,000, a pale shadow of 50,000 used to take every year during its heydays.
Wipro does not share annual hiring figures but Chief Executive Officer T K Kurien has said the company aspires for a high growth level like that of TCS. But with a lower headcount. “Large numbers of people are the biggest worry for us because we believe that at some time, you will hit an upper limit. So, our target is to reach good performance but with the highest level of automation,” Kurien had said in an earlier interview to Business Standard.
Despite slow hiring by Infosys and Wipro, India’s largest IT services company, TCS, has continued recruiting in bulk from engineering colleges all these years.
Last week, sources said, TCS was undergoing a restructuring exercise, expected to finish by February. All verticals have been asked to identify senior staff above the rank of consultant — senior consultant, principal consultant, vice-presidents — who have not been very productive.
Middle-management trimming could become the norm for several other companies, experts said. Lakshmikanth added mid-level employees overseeing operations were facing redundancy from automation.
“I remember, almost a year ago, several CEOs of the IT services industry were openly discussing if they needed people with 20-25 years of experience because people with 10 years’ experience are capable of handling these responsibilities,” said Sudin Apte, research director and chief executive officer at Offshore Insights. “Either senior-level skills do not matter now in the changing nature of technology or the senior level is more into management of client relations and technical expertise is required at less experienced levels.”
