Hi there, here is a little history along with data points that may interest you.
Due to macro headwinds, during 2016 to 2019, demand led growth was limited. So, entire industry used resource utilization as the lever. Please see the chart to observe how employee utilization went up for all companies (TCS does not provide that data point, hence not included).
As utilizations went up from ~70% to ~80% there was limited room (called bench strength) to take on new large projects or internal R&D, etc.
However, with Covid-19 pandemic (which no one could foresee), the demand zoomed and the industry faced severe supply challenge. Therefore, the industry hired aggressively to meet massive demand during 2020 to 2022. I am not at all saying the managements are ill-willed, but taking care of employees during and post Covid was a business necessity.
On a side note, number of new hires was a leading indicator of growth of an IT service company during Covid times. However, now that demand has softened (see how utilizations have come down in the chart), the companies feel they’ve over-hired and are focusing on flattening the pyramid. They are letting senior managers go and hiring only at bottom levels. As a result, the hiring number is no longer relevant metric to assess growth of a company. I am working on a detailed write up on key factors an IT services business. I will update here soon.
Hope it helps!
Mahesh
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