India's Top IT Firms Cut Nearly 64,000 Jobs Amid Global Economic Uncertainty

India's leading IT companies, Tata Consultancy Services (TCS), Infosys, and Wipro, have collectively cut nearly 64,000 jobs in the fiscal year 2023-24 amid global economic uncertainty. This marks the first time in history that these major software services exporters have seen a full-year drop in their employee numbers.

Infosys, India's second-largest IT services company, reported its first annual headcount decline in over two decades, with a 7.5% drop in its workforce, amounting to 25,994 fewer employees. The company also disappointed with its forecast of a modest 1-3% annual revenue growth for FY25, raising concerns that the global macroeconomic uncertainty continues to impact client decisions and discretionary spending.

Wipro, the fourth-largest software services company, saw a decline in headcount for the second consecutive year. The company reported a net reduction of 6,180 employees in the fourth quarter, with its total headcount at the end of March 2024 being 234,054. Wipro's workforce decreased by 24,516 employees in FY24, and its attrition rate remained stagnant at 14.2%.

TCS, India's largest IT firm, also experienced a sequential decrease in headcount by 1,759 employees, with its total workforce standing at 601,546 as of March 31, 2024. The company saw a 2.1% decline in headcount, the first annual dip in 19 years.

Why this matters: The significant job cuts by India's top IT firms highlight the challenges faced by the industry due to the unfavorable global macroeconomic environment. The reduction in headcount and cautious revenue growth projections indicate that the IT sector is grappling with weaker global demand and falling discretionary spending, which could have broader implications for India's economy and employment landscape.

The decline in headcount is attributed to the industry's corrective measures following the excessive hiring spree during the Covid pandemic and the ongoing contraction in demand. Market analysts expect the IT companies to witness near-term weakness in revenue growth, but the strong order book will support their growth prospects in the current fiscal year (FY25).

Despite the layoffs, TCS plans to maintain its hiring of freshers, aiming to hire a similar number as the previous year, around 40,000, in FY25. Wipro, on the other hand, is yet to complete the onboarding process for freshers who bagged offer letters during its post-COVID hiring surge and said it will honor past hiring commitments before considering campus recruitments in the current fiscal year.

The IT firms are facing global economic uncertainty, leading to these job cuts. As Wipro CEO Srini Pallia cited, "the macroeconomic environment remains uncertain." The companies are focusing on enhancing utilization rates and broadening margins by assigning benched employees to navigate through these challenging times. The outlook for FY25 is stronger compared to the previous fiscal, according to several brokerages, but the IT services sector in India continues to face headwinds due to reduced technology spending by clients and the overall global economic conditions.

Key Takeaways

• India's top IT firms TCS, Infosys, and Wipro cut 64,000 jobs in FY24 amid global uncertainty.
• Infosys reported its first annual headcount decline in over 20 years, down 7.5%.
• Wipro saw a 24,516 drop in headcount, its second consecutive annual decline.
• TCS experienced its first annual headcount dip in 19 years, down 2.1%.
• IT firms face weaker global demand, falling discretionary spending, and plan to enhance utilization.