Two of India's leading software services companies, Tata Consultancy Services (TCS) Ltd and HCL Technologies Ltd, saw their employee wage costs as a percentage of total expenses reach a six-year peak in the September quarter.
Meanwhile, Infosys, the country's second-largest software services company, experienced a slight decrease in employee expenses. However, the fact that employee costs still constitute over 60% of total expenses during cost pressures is a cause for concern among information technology firms.
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According to a Mint analysis, TCS allocated 77.4% of its total expenditure to wage costs, while HCL Technologies dedicated 69.6% to employee expenses. Infosys reported that wage costs accounted for 68% of its total expenditure, a slight decrease from the peak of 68.4% in the June quarter.
As per the Mint report, this highlights that despite reducing campus recruitment to control expenses, lateral hiring from the market at a 30% salary hike continues to be the standard practice, making employee retention a challenging endeavor.
Indian IT giants Tata Consultancy Services (TCS), Infosys, and HCL Technologies have recently announced their Q2 FY24 results, and a common trend across all these companies is a significant reduction in their workforce.
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While TCS reported a net decrease of 6,333 employees on a quarterly basis, bringing its net employee headcount to 608,985 as of September 30, Infosys witnessed a net decrease of 7,530 employees in its headcount compared to the previous quarter, leaving it with 328,764 employees as of September 2023.
HCL Technologies also saw a decline in net headcount addition, with a reduction of 2,299 employees in Q2 FY24. The company's total headcount stood at 221,139, marking the second consecutive quarter of a declining headcount.