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India’s IT services firms tighten their wage belts. But are they getting fitter?

Livemint · 1m

India's top IT services companies have managed to control people costs during the September quarter despite the emergence of India-based IT wings of multinational companies as attractive alternatives for employees. These companies have replaced middle and senior executives with junior employees, investing in their upskilling. However, HR executives warn that fewer recruits are expected in the coming months due to the US election, conflict in West Asia, and the upcoming holiday season. The lower employee costs will improve margins, but this does not necessarily indicate an immediate improvement in the sector. Tata Consultancy Services, Infosys, and HCL Technologies saw a decline in employee costs as a share of revenue in the second quarter, while Wipro was the exception with a marginal increase. Attrition rates also increased during the same period. The IT services sector has been forced to let go of employees not on a project, a sign of distress in the sector, to control costs.