IT services major Tata Consultancy Services saw its headcount decline on a quarter-on-quarter basis, as it saw a reduction of 2,197 employees amid an increasingly cautious demand environment. A contraction in the net addition number was seen previously in the first quarter of FY21, which was when India was in a complete lockdown due to the first wave of the pandemic.
The company, which announced its results for Q3FY23 on January 9, said its headcount is currently at 6,13,974, down from 6,16,171. This is the first time the net addition has declined in 10 quarters. TCS added 9,840 employees during Q2FY23, which was also a significant dip.
Milind Lakkad, the company’s Chief Human Resources Officer, however said that the hiring slowdown is not a blip, and that it was ‘planned that way’.
TCS had added 28,238 employees during the same quarter last year.
Addressing the press, Lakkad said that they have made investments in fresh talent as well as in talent development to make them productive.
“That investment coupled with tightening, all of that resulted in a negative headcount. That does not indicate anything on the demand side. Demand is high, we are just operating very efficiently right now,” he said.
Elevated attrition, which has been a point of concern across the industry, saw a slight decline. Attrition in Q3FY23 stood at 21.3 percent, a slight decline from 21.5 percent in Q2FY23 on a last-twelve-month basis. TCS said that this attrition is expected to fall further in the coming quarters.
In Q3FY22, TCS’ attrition was 11.9 percent.
It onboarded around 7,000 freshers during the quarter, with a total of 42,000 freshers being added during the fiscal so far. TCS had announced that it onboarded 35,000 freshers in H1FY23, of which 20,000 had been in Q2FY23. TCS hired over 1 lakh freshers in FY22, with a target of 40,000 for FY23.
“Our focus over the last few quarters on bringing in fresh talent at scale, training them on new technologies and making them productive is paying off. We are particularly proud of having 125,000 TCSers at middle and senior levels who have been with the company for more than 10 years on average. They have been central to the successful cultural integration of all the fresh talent we have onboarded in the last couple of years, and their contextual knowledge and customer-centricity have been key to the high level of customer satisfaction that TCS is known for,” said Lakkad in a statement.
For the quarter, Nirmal Bang’s Head of Research Girish Pai said the hiring slowdown was expected to continue, and that the number “will also serve as a harbinger of any growth slowdown, although the company has been saying otherwise.”
The focus this quarter will be on the impact of furloughs across the industry, which was higher than expected.
“The focus on furloughs will be high. The furlough impact was minimal in the last two years due to aggressive client spending and large deal ramp-up. We expect high furloughs in hi-tech and moderate in others,” a note by Kotak Institutional Equities said.
