Tech companies including TCS, HCL Tech face rising employee expenses

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.

Also read/watch - Tech hiring slowdown: TCS, HCL, Infosys report significant workforce reductions

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.

Tech hiring slowdown:

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.

Also read/watch - TCS hiring scam: fires 16 employees, bars 6 vendors

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.