The Hindu Business Line : IT majors see climb-down on manpower addition

Chennai, July 20 “When the environment is so uncertain, and our clients themselves are not sure how things would turn out in the next few months, why would we continue to hire indefinitely if we have met our annual manpower targets?” — this was the retort from the head of human resources in one of the top four Indian IT services companies, when asked about rumours that companies had stopped recruitments in March this year. Bitter medicine, in the context of the standing joke in the IT services industry: “Trespassers will be recruited!”

The mood does not seem to have changed much since then. Cumulative manpower addition among the top four Indian IT services companies has seen a sharp climb-down for the quarter ended June 2008, compared with the year-ago quarter. (The accompanying table shows that net addition numbers together for the four companies is down by about half.)

TCS and Infosys saw a slump in net manpower addition by a few hundreds compared with the June 2007 quarter, while seeing a sizeable increase in addition compared with the March 2008 quarter. This may be explained by the fact that the mass of fresh recruits begins to join organisations in the quarter ending June.

Net additions for Satyam and Wipro were significantly lower than they have been historically. Mr Pratik Kumar, Vice-President (HR) at Wipro clarified that about 2,500 fresh graduates had joined the rolls towards the end of the March quarter, which could reflect on lower net addition numbers in the June quarter.

Attrition rates

Attrition rates (number of employees leaving the organisation per 100) between the March and June 2008 quarters have gone up marginally for TCS and Infosys (to 12.8 and 13.6 per cent respectively) while Satyam’s has come down by 0.5 percentage points to 12.6 per cent. Irrespective of whether companies calculate attrition rates on a trailing twelve-month basis or annualised for the quarter, the comparison with their own attrition rates in the past is what matters.

Wipro IT services (excluding the BPO services) saw a net reduction of 725 in headcount for the quarter ending June 2008 compared to the previous quarter. While Wipro does not reveal gross manpower addition numbers, it said that involuntary attrition (or those asked to leave the company on the basis of poor performance) was about 1.4 per cent of total attrition.

Lower Salary hikes

TCS and Wipro have clarified that salary hikes are likely to be lower this year given the gloomy business scenario worldwide. Wipro has indicated that the hikes for offshore employees could be in the 8-9 per cent range, lower than the 12-14 per cent, which has been the industry average for a while now.

Significantly, all four companies have indicated that their recruitment plan for the year announced earlier was to continue without change.