IT majors see an increase in utilisation rate

CHENNAI: As the tech titans grapple with digital and changing consumer behaviour, their emphasis on improving productivity of their workforce seems to be paying off with utilisation levels improving by up to 600 basis points (100bps = 1 percentage point).

Assessing utilisation levels is a significant part of the financial review process as these numbers indicate the workforce efficiency of the company. With multiple winds of change impacting the IT sector - from tightening client spends to digitalisation and automation - finding the right person with the right skill, or reskilling the existing workforce, has become paramount.

All the IT majors have been investing significant time and effort in reskilling and preparing their workforce for automation. For instance, in the last one year, CTS has seen a 6% jump in utilisation (including trainees). The company ended the year with a headcount of 260,000, or 200 lesser than last year. The marked change in hiring plans was evident with CTS entering colleges for campus recruitments several weeks behind schedule. It has reported 10% growth in revenues year on year with fewer people.

HfS Research CEO and chief analyst Phil Fersht said, "The Indian heritage IT majors are quickly working out how to deliver technology and business services with less people, through smart deployment of automation tools, AI, digitalisation and constant refinement of people delivery."

Among other tech cos, Infosys recorded a 4% increase and HCL 1% improvement in utilisation. While Wipro saw its utilisation levels oscillate during the year, but ended flat.

In terms of additions, Wipro saw a drop, ending the year with 1.77 lakh employees - 1,625 employees fewer than December 2016. While both TCS and Infosys saw an increase in headcount in the last five quarters, of 1,928 and 12,000 respectively, there has been a steady drop in the number of additions since then with small increases in revenue.

For instance, TCS had 6,978 additions in the quarter ended December 2016 as against 1,667 additions for the quarter ended December 2017. Changing immigration policies in the US are also pushing companies to increase onshore hiring. Both Infosys and CTS have spoken about increasing their headcount in the US. CTS has hired over 6,000 workers in the US this calendar year.

Everest Group CEO Peter Bendor Samuel said, "As the industry moves from the labour arbitrage factory model to the technology-based digital model, the revenue per person rises and fewer people are needed."

SOURCES:GADGETSNOW(BETA)