More work, per worker: How India's IT giants are earning smarter

Mint

6 hours ago

Three of India's top five IT outsourcing firms have managed to increase their revenue per employee in the post-pandemic era, driven by reduced hiring, increased automation, and a surge in third-party software licence sales. This comes as global macroeconomic headwinds dampen tech spending by Fortune 500 companies.
Tata Consultancy Services Ltd (TCS), Infosys Ltd and HCL Technologies Ltd (HCLTech) reported a notable uptick in business per employee in the last financial year, according to a Mint analysis of company filings.
TCS saw its revenue per employee reach $49,902, Infosys $60,164, and HCLTech $61,388. These figures represent increases of 4.91%, 5.79%, and 1.02%, respectively, from FY22.
In contrast, Wipro Ltd and Tech Mahindra Ltd saw a decline in this metric over the same period. Wipro's revenue per employee dipped to $45,118 from $46,983, while Tech Mahindra's fell to $42,585 from $44,065.
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Infosys, India's second-largest IT services provider, recorded the biggest jump in per-employee revenue since FY22, with each employee contributing an additional $3,295. HCLTech, the third-largest, saw the slowest increase, at $618 per employee during that time.
Queries emailed to TCS, Infosys, HCLTech, Wipro, and Tech Mahindra remained unanswered.
Hiring cools as demand ebbs
Increased productivity at the three companies coincides with a marked slowdown in hiring, analysts said. Global uncertainties, trade tensions, and geopolitical conflicts have prompted major corporations to curb their technology expenditures, leading to reduced demand for IT services and, consequently, less recruitment by outsourcing giants.
While India's largest IT outsourcers continued to expand their headcount until FY23, hiring has decelerated significantly thereafter. Over the past two years, the TCS, Infosys, HCLTech, Wipro, and Tech Mahindra have collectively cut their workforce by 57,891 employees. Bengaluru-based Wipro, which generates the lowest revenue per employee among the top four, was responsible for the largest portion of these job cuts.
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This contrasts sharply with FY23, when the top five firms, led by TCS, collectively added 358,932 employees from the end of FY21. To put that in perspective, the total headcount added by these companies in those two years exceeded Infosys's entire workforce.
"Hiring has been slow in the last two years, which has caused the revenue per employee to increase," said Kshitij Saraj, an equities associate at Tusk Investments. "IT outsourcers in many cases have not backfilled employees at the lower level too."
Broader implications
The subdued hiring environment signals a concerning trend for India's engineering graduates. Fewer job opportunities mean more graduates will need to seek employment elsewhere, and reduced hiring pressure allows IT service providers to keep entry-level salaries largely unchanged.
In FY25, TCS, Infosys, and HCLTech reported revenues of $30.18 billion, $19.28 billion, and $13.84 billion, respectively, with annual growth rates ranging from 3.8% to 4.3%. Wipro and Tech Mahindra, however, posted a second consecutive year of revenue decline, closing with $10.51 billion and $6.26 billion in revenue.
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Another contributing factor to the rise in revenue per employee is the sale of third-party software. 'Higher share of third party item for sale could also be contributing to improved revenue per employee," said Abhishek Kumar, equity research analyst at JM Financial.
Selling software and software licenses guarantee revenue to an IT outsourcer without having to add headcount.
Software sales
While Mint could not independently verify the revenue generated by IT outsourcers from third-party software sales, analysts estimate it to be around 7% of total revenue. Noida-based HCLTech is a notable exception, publicly disclosing revenue from software products, which accounts for about 10% of its full-year revenue, including licences.
Kumar pointed out that IT outsourcing companies are deploying more existing personnel without projects rather than increasing new hires, and noted the increased productivity stemming from the use of generative AI tools.
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A third analyst echoed this sentiment, suggesting that the rise of Gen AI and automation has enabled Indian IT companies to secure more business with a smaller engineering workforce.
"AI tools are being widely used by IT outsourcers for their clients, which is leading to each employee getting more work and handling more clients," said a Mumbai-based analyst, who requested anonymity.