In­fosys plans less staff de­ploy­ment

Business Standard - - COMPANIES - DEBASIS MO­HA­P­A­TRA

In­fosys, the in­for­ma­tion tech­nol­ogy (IT) ma­jor, has de­cided to not to push up­ward its staff util­i­sa­tion for now. The coun­try's sec­ond largest IT ser­vices com­pany is look­ing at build­ing the ‘bench’ of em­ploy­ees in re­serve, to be pre­pared for emerg­ing de­mands, be­side keep­ing staff at­tri­tion in con­trol.

From a peak of around 86 per cent at the be­gin­ning of the fi­nan­cial year (April 1, 2018) the Bengaluru-head­quar­tered firm is look­ing at a util­i­sa­tion rate of 83-85 per cent. In the past cou­ple of years, with in­creas­ing pric­ing pres­sure and com­pe­ti­tion, al­most all In­dian IT ser­vice com­pa­nies have pushed em­ployee util­i­sa­tion; some were fo­cus­ing on a ‘just in time’ hir­ing model. Though this had ben­e­fited the profit mar­gin, it put a lot of pres­sure on the sup­ply base, as the bench (num­ber of em­ploy­ees in re­serve, not as­signed any project work) had been re­duced to near-zero.

"If you look 18 months back, our util­i­sa­tion was al­ways 78-80 per cent. Since then, it has gone up but we felt that this was not sus­tain­able and we want this to re­main at a band of 83-85 per cent,” said U B Pravin Rao, chief op­er­at­ing of­fi­cer at In­fosys. “That gives us enough flex­i­bil­ity to cap­ture the de­mand."

In­fosys’ em­ployee util­i­sa­tion rate, like many oth­ers in the sec­tor, started pick­ing up from the 80.5 per cent in the first quar­ter of 2016-17 to 83.8 per cent in the quar­ter ended De­cem­ber 2018. In April-June, the first quar­ter of the cur­rent fi­nan­cial year, it had touched an all­time high of 85.7 per cent.

An­a­lysts said the fall in util­i­sa­tion is linked to the higher em­ployee ad­di­tion seen in the past quar­ter. "Ear­lier, IT ser­vice com­pa­nies were not hir­ing, due to sub­dued de­mand. But, as they add more em­ploy­ees on the rolls, due to more num­bers of con­tracts, the util­i­sa­tion level will fall as they can't put peo­ple on projects overnight," ex­plains Kris Lak­sh­mikanth, chair­man of per­son­nel con­sul­tants Head Hunters In­dia.

Adding: "In­creased on-site hir­ing, es­pe­cially in US, is also lead­ing to a fall in util­i­sa­tion lev­els, as com­pa­nies have to hold on to peo­ple there even with­out projects, due to short­age of STEM (sci­ence, tech­nol­ogy, en­gi­neer­ing, math­e­mat­ics) tal­ent.”

Dur­ing the July-De­cem­ber pe­riod, In­fosys had added 15,596 peo­ple on a net ba­sis. In com­par­i­son, the ad­di­tion was 3,743 in all of 2017-18. And, raised lo­cal­i­sa­tion by hir­ing 7,500 em­ploy­ees in the US, in­clud­ing 2,000 cam­pus hires in 18 months.

At the end of the Septem­ber quar­ter, the util­i­sa­tion at HCL Tech­nolo­gies was 86.7 per cent and 85.5 per cent at Wipro. Both are yet to an­nounce the De­cem­ber quar­ter re­sults. Tata Con­sul­tancy Ser­vices, the sec­tor’s largest, stopped shar­ing this fig­ure a few quar­ters ear­lier.

In­fos­yshas al­soseenahigh­er­at­tri­tion level, of more than 20 per cent over re­cent quar­ters. It was 23 per cent in the June quar­ter, fall­ing to 22.2 per cent in the Septem­ber one. In the just-con­cluded quar­ter, there was a fur­ther fall to 19.9 per cent. This, how­ever, con­tin­ues to be far higher than at TCS, which had 11.2 per cent in the De­cem­ber quar­ter.

"In a way, planned re­duc­tion in util­i­sa­tion could be linked to the higher at­tri­tion level at In­fosys for the past few quar­ters," said Pa­reekh Jain, founder of Pa­reekh Con­sult­ing.

Main­tain­ing de­cent bench strength would, he added, help in im­ple­ment­ing new projects.

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