More than 7,700 senior professionals with over 15 years of experience have exited India's IT services firms -- TCS, Infosys, Wipro, HCLTech, Tech Mahindra, Cognizant, and LTIMindtree -- over the past 12 months.
'People are taking effort to train and adapt to current skills.' 'If that is not there, they are not useful to us.' 'They have to adapt to new technology, and what is important is learnability.'
The second-quarter performance of the top five information-technology services firms gives the hint that slow growth has bottomed out on the back of discretionary spending kicking in for the sector's largest vertical - the banking and financial services. However, concern about the macro-environment continues to be a challenge. Among the top four - Tata Consultancy Services (TCS), Infosys, HCLTech, and Wipro - it is Bengaluru-based Infosys that has performed the best and that was evident in its full-year revenue guidance.
India's largest IT services player Tata Consultancy Services (TCS) saw its $2 billion, 10-year deal with Transamerica Life Insurance Company come to an end even before the period was over. Transamerica is the subsidiary of American arm of Dutch insurer Aegon NV. This is not the first time such a long-term deal has been called off. Earlier this year, UK's National Employment Savings Trust (NEST), ended a $1.8-billion deal with French IT services player Atos.
With the rush of growth after the pandemic slowing down, many leaders are moving to firms that may be smaller but are growing much faster and have the headroom to grow.
Trouble started brewing after Cognizant announced that Ravi Kumar, former Infosys president, would take over as the Nasdaq-listed company's CEO.
Stock market crash: TCS sheds $21 billion in market capitalisation, Infosys $7 billion and Wipro around $3 billion
Apart from such advisory, IT biggies such as TCS, Infosys and HCL Tech among others have been pursuing 'remote working' model to overcome the situation.
Already 15-20 per cent of the workforce, earlier used to be procured from staffing firms and subcontractors, are replaced by freelancers tapped from platforms like Topcoder, GitHub, and Upwork.
Experts are of the opinion that though digital services hold the future, the companies are likely to take a hit during the transition period.
Tepid growth in verticals like banking and finance, healthcare, retail and automotive will drag overall IT spends in the current year, reports Debasis Mohapatra.
Krithi Krithivasan is the kind of person one might look to when the need is to calm things down and put things back on track.
To begin with, there would be the immediate integration of various technology stacks. This would create more business for global consulting and IT services entities such as KPMG, PwC, EY, Accenture and IBM, among others. Indian service providers - Infosys, Tata Consultancy Services (TCS), and Wipro, for instance - would also cash in.
According to experts in human resources, even joining of new graduates is likely to be staggered as companies are expected to onboard staffers after gauging the demand scenario.
Once implemented, Rishad Premji will be one of the youngest business leaders to don the role of non-executive chairman at a large cap Indian company.
'His working style differs from his father as he is a quick decision-maker.'
Industry experts are of the opinion that the spurt in recruitment happened as IT services firms went aggressive on hiring in anticipation of a strong demand environment.
Major IT firms such as Tata Consultancy Services, HCL Technologies, Infosys, Cyient, and L&T Technology Services have direct exposure to Boeing or its suppliers' ecosystem, which comprises engine manufacturers, body suppliers, and avionics providers. These firms provide services like application development, testing, engineering, avionics, and business process management for the Boeing 737 Max programme.
Around 1,680 deals worth over $80 billion will be renewed next year. Among Indian vendors, Infosys, TCS, and HCL Technologies are better placed to see a higher growth rate in 2020.
The top four Indian IT firms have cash reserves of nearly $15 billion with TCS alone holding $5.9 billion in reserves, followed by Infosys with $3.6 billion, and Wipro with $3.4 billion. HCL Technologies has cash reserves of $1.75 billion.
Clients are seen realigning their tech strategy by moving works from own captives to third-party service providers which is mostly benefiting to large companies such as Infosys, TCS, Wipro or HCL Technologies.
Most Indian IT firms work as system integrators for Huawei and though the exposure is very less as of now, the potential is more due to 5G roll out. As pressure to keep the Chinese firm out of the 5G network grows, other global firms, including Japan's NEC, South Korea's Samsung, Finland's Nokia and Sweden's Ericssion are increasing their investments to grab more market share in the telecom sector.
Squeezing growth prospects in IT services firms and higher compensation in technology centres run by global companies are the two factors driving this trend.
This time, not only would the job cuts be higher, but they would be even more broad-based, encompassing various levels of employees.
Infosys is likely to report strong revenue growth in the fourth quarter of FY19 on the back of momentum in the big deal space.
Indian IT major HCL Technologies will provide training for three months to 100 students each in its Lucknow and Madurai campuses.
In the last couple of months, top Indian IT services providers, including TCS, Infosys, Wipro and HCL Tech have announced setting up cyber threat management centres in the US and Europe.
According to Nasscom, engineering services exports had grown at 13 per cent in 2017 compared to six per cent rise in IT services exports and eight per cent in business process management (BPM). It had also recorded the highest growth in the last three years, reports Debasis Mohapatra.
The analyst community tracking the Indian IT services industry took special note of Accenture's first quarter (Q1) performance, which showcased the rapid growth of its consulting business that outperformed its outsourcing business. Bookings indicate that the trend will continue. Consulting bookings increased 41.6 per cent year-on-year (yoy) to $9.4 billion, higher than the 17.6 per cent growth in outsourcing to $7.4 billion. The management commentary was also more bullish on the consulting business.
It had reorganised its India business by carving out public sector undertaking and government businesses. Besides the company had also split its India and West Asia businesses.
From the beginning of 2021 Wipro has moved on to a new organisational structure. Analyst tracking the company are now wondering if CEO Thierry Delaporte's attempt to bolster Wipro's presence in the BFSI (banking, financial services and insurance) space by acquiring Capco for $1.45 billion is a step taken too early. Though many agree that Capco as a target may be good, but Wipro, which has been the most aggressive player in acquiring firms compared to its Indian players, does not have much to show in terms of performance as it continues to lag peers.
In the last couple of months, the IT and BPO space has seen a big uptick in M&A activities, with companies merging with other entities to become bigger players.
To be able to manage any such uptick, Indian IT services players are hiring more locals, and relying on hybrid work models.
The company is looking at building the 'bench' of employees in reserve, to be prepared for emerging demands, beside keeping staff attrition in control. Maintaining decent bench strength would help in implementing new projects.
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