Tech industry layoffs post-Covid have been a major concern, affecting white-collar employment in India. This trend isn’t confined to startups alone; India’s top three IT firms – TCS, Infosys, and Wipro – laid off their 64,759 employees in fiscal year 2024, which concluded on March 31st. Surprisingly, Infosys alone accounted for a whopping 40.1% of these layoffs, letting go of 25,994 employees. This reduction brought their total headcount down to 317,240, representing a 7.6% YoY decline.
This trend of workforce reduction is mirrored across the industry. Wipro contributed 37.9% of the total layoffs among the top three firms, releasing 24,516 employees in FY24. This resulted in a total headcount of 234,054 by the end of March 31, 2024, marking a decrease of 9.5% YoY.
TCS, India’s largest IT services company, experienced a record decline in its total headcount for the first time in 19 years, with 13,249 employees laid off in FY24. This figure represents 20.5% of the total layoffs among the top three IT companies.
The above layoff data stress a significant shift in workforce dynamics within India’s IT sector, which is experiencing evolving market conditions and technological advancements.
Over the past decade, TCS’s total headcount grew substantially from 300,464 in fiscal year 2014 to 601,546 in fiscal year 2024. In contrast, Infosys experienced significant growth during the same period, with its headcount increasing from 160,405 to 317,240.
“When we started, we were at 77% utilisation including the trainees. The growth environment was different at that time. Our utilisation has gone up to 82-83%. Our attrition has also come down significantly. That is the reason for net headcount reduction,” Infosys CFO Jayesh Sanghrajka said during the company’s Q4 results.
Now, the interesting question is, do these significant layoffs in tech giants in FY24 impact their revenues, net profit and client orders? Surprisingly, the financial impact remains resilient.
Financial Resilience Amid Layoffs
TCS reported a 6.8% YoY increase in revenue and an impressive 10.5% YoY rise in net profit for FY24. Similarly, Infosys achieved 4.7% YoY revenue growth and an 8.9% YoY increase in net profit during the same period. In contrast, Wipro faced challenges, recording a decline of 0.8% YoY in its operating revenue and a 2.2% YoY decline in net profit for the fiscal year ending March 31, 2024.
If we attribute Wipro’s performance to internal management issues, with the CEO recently quitting, what do the results of the other two tell us about the health of the industry?
TCS’s exceptional results indicate sustained growth and market leadership. The company’s impressive deal pipeline, including winning a record $13 billion worth of new deals in Q4 FY24, demonstrates robust demand and client confidence.
TCS’s total order book soared to a record $42.7 billion for FY24, reflecting strong client engagement and expansion across various client segments. Notably, TCS experienced significant growth in high-value clients—$100M+ clients increased by 2, $50M+ clients by 6, $10M+ clients by 26, and $1M+ clients by an impressive 53 year-over-year.
Challenges and Opportunities
The declining headcount and positive financial results suggest that TCS, Infosys, and other IT firms are strategically transitioning towards higher value-added services and increased automation for routine tasks. Although this shift is beneficial for the industry’s efficiency and innovation, it poses challenges for employment in India’s IT sector, altering its appeal for graduating engineers and MBAs.
TCS has reportedly shifted its focus towards campus recruitment. The IT services giant has implemented a rigorous training program for new hires to ensure they are well-prepared for their roles.
Similarly, Infosys has adopted a more agile model of campus hiring, adapting to changing industry demands. Despite these shifts, the demand for middle-level job roles in Indian IT companies remains strong, with active efforts to hire and reskill through training and retraining initiatives. But can India’s IT sector upskill its workforce before automation takes over?
