Indian IT behemoths have long been the go-to employers for engineers fresh out of college campuses, but it seems that the fiscal year 2024 will bring about a significant change. Infosys, one of the industry’s key players, has made a decision that might create a worrisome scenario among engineering students in their final year. Breaking the tradition, Infosys has decided not to hire college students this year. What makes the move even more noteworthy is that the company has been experiencing a significant drop in its workforce over the past few quarters.
Infosys’s headcount has shrunk by 7,530 employees in the last three months and by 16,454 in the last 12 months. This has resulted in a total workforce of 328,764 in Q2 FY24, ending on September 30, 2023. The September quarter was the sixth consecutive quarter of reduced hiring and the second consecutive quarter of an overall workforce decrease for Infosys.
The consistent reduction in Infosys headcount has also left some freshers who had received offers in limbo, awaiting the onboarding process.
Even though Infosys has made significant strides in reducing attrition rates, dropping from 27.1% in Q2 FY23 to 17.3% in Q1 FY24, and further down to 14.6% in Q2 FY24, the company is persisting in downsizing its workforce. This trend aligns with a broader shift seen in Indian tech companies where they are striving to maximize resource utilization. Companies are actively exploring various strategies and approaches to stay agile and adapt to evolving economic conditions.
Infosys’ utilization rate, excluding trainees, currently stands at 81.8% in Q2 FY24, which is a decrease from 83.6% during the same period a year ago. On the other hand, the utilization rate, including trainees, increased to 80.4% from 76.6% during the same period.
In a press conference, Infosys CEO and MD Salil Parekh emphasized that the company is addressing inefficiencies in its employee structure and has room to enhance resource utilization to reach levels of 84-85%. This strategic move reflects Infosys’ intention to optimize its existing talent pool and align it with market demand.
“With that slowing down over this year, utilisation had fallen into the 70s and therefore, now quarter on quarter you’re seeing an improvement. We still have a significant fresher bench. We are training them on new skills,” said Nilanjan Roy, Infosys Chief Financial Officer.
Behind Campus Hiring Decision
India’s tech industry had been riding a hiring wave during the peak of the Covid-19 pandemic in 2020. It was a time of growth and expansion. However, towards the end of 2022, major IT companies began downsizing their workforce as they recognized the need for cost-cutting. These mass-scale layoffs have continued well into the first half of this year. Although some companies are still handing out pink slips to underperforming employees, others, like Infosys, are taking a different approach to trim their expenses.
Infosys’ strategic approach to halt hiring from college campuses this year might have more to it than meets the eye.
As per a report from PTI, Infosys has announced that it won’t be recruiting fresh talent from college campuses this year. The rationale behind this decision is the company’s existing surplus of “freshers” or recent graduates and a decrease in demand, particularly in key markets like the US.
Nilanjan Roy, the CFO, during a Q2 FY24 briefing, said that many freshers are currently being trained in Gen AI, and there are no immediate plans for additional freshers’ recruitment. Infosys hired 50,000 freshers last year ahead of actual demand, resulting in a surplus of fresh talent.
However, Infosys has assured that it will uphold its commitments to all the job offers that have already been extended. The company plans to recruit individuals as projects become available, ensuring that they honour their prior commitments.
“The current slowdown has definitely impacted campus hiring this year. Due to economic uncertainties, companies are being cautious with their hiring plans, resulting in a reduction in the number of campus hires this year,” said Kalyan Durairaj, Director of Human Resource (APAC) at SaaS company FourKites.
Earlier this year, Infosys made headlines when they let go of 600 freshers who did not pass an internal fresher assessment (FA) test. The notable inconsistency in their approach made this story even more intriguing. It was revealed that only freshers who joined the company after July 2022 were affected by these terminations, while those who came on board before that date were not impacted. This raised questions about the criteria used for making these decisions.
This discrepancy in firing highlights the evolving and adaptable nature of Infosys’s HR and talent management strategies as they navigate the challenges of the IT industry.