Latest news with #Krithivasan
Mint
6 hours ago
- Business
- Mint
TCS vs Infosys vs Wipro vs HCL Tech: Hiring plans, salary hikes, guidance— is the worst over for IT stocks?
Mixed Q1 results, cautious management commentaries, and persisting global uncertainties continue to haze the outlook for the Indian IT sector. The Q1 numbers were expected to be soft, but they seem to have come in even below expectations, disappointing the market. Consequently, the Nifty IT index has been in the red for three consecutive weeks on a weekly basis. The Q1 numbers of Infosys were better, but TCS, Wipro and HCL Tech disappointed the Street. TCS and Wipro reported a decline in revenue in constant currency (CC) year over year (YoY), but Infosys and HCL Tech fared better. TCS's CC revenue declined 3.1 per cent, while that of Wipro fell 2.3 per cent YoY. Infosys' CC revenue rose by 3.8 per cent, while HCL Tech reported a 3.7 per cent YoY rise in CC revenue. TCS's consolidated profit rose 6 per cent YoY to ₹ 12,760 crore. Infosys saw an 8.7 per cent YoY growth in profit. Wipro, too, reported a 10 per cent YoY rise in Q1 net profit at ₹ 3,336 crore. On the other hand, HCL Tech's profit fell 9.7 per cent YoY to ₹ 3,843 crore. While the numbers show how India's top four IT players performed last quarter, other key details—such as guidance, headcount, hiring plans, and salary hikes—offer cues about how these companies are likely to fare in the coming quarters. Let's take a look: Headcount and hiring plans: TCS's workforce grew by 5,090 sequentially, standing at 6,13,069 as of June 30, 2025, compared to 6,07,979 at the end of the March quarter of the last financial year. However, IT services' attrition was 13.8 per cent for the last twelve months against 13.3 per cent in Q4FY25. According to reports, TCS plans to hire 42,000 freshers in FY26. Salary hikes: TCS has not announced when it will plan salary hikes for its employees, but it has emphasised that its 'priority' focus is delivering wage hikes for its over six lakh workforce. Guidance: TCS did not offer revenue guidance while declaring its Q1 results. However, its management said business from clients based abroad would be better than last year. 'The only thing that's a bottleneck at this time is a certain amount of lack of clarity in the market. So, once that lifts, we believe that the spend should come back," said Krithivasan. Headcount and hiring plans: For Infosys, the number of total employees increased to 3,23,788 from 3,15,332 YoY and 3,23,578 QoQ. Over the last twelve months (LTM), IT services voluntary attrition stood at 14.4 per cent, down from 12.7 per cent year over year and 14.1 per cent quarter over quarter. According to its April announcement, Infosys plans to hire over 20,000 freshers in the current financial year. Salary hikes: Infosys recently implemented a wage hike. However, it has not yet decided on the next pay hike for its employees. Guidance: Infosys has guided for FY26 CC revenue growth of 1-3 per cent, upgrading the lower end of guidance from 0 to 1 per cent but leaving the upper end unchanged. Headcount and hiring plans: HCL Tech's total headcount by the end of Q1FY25 was 2,23,151, down 269 from the end of the March quarter this calendar year, when it was 2,23,420. HCL added 1,984 freshers during the quarter compared to 1,078 YoY. The attrition rate over the last twelve months stood at 12.8 per cent, the same as the rate in Q1 of last year. Salary hikes: HCL Tech did not make any major announcement regarding salary hikes. The company had earlier said its wage hike cycle would start from October 2025. Guidance: HCL Tech expects its CC revenue to grow between 3 per cent and 5 per cent YoY, compared to its earlier estimate of 2 per cent to 5 per cent announced during the Q4FY25 results. EBIT margin may be between 17 per cent to 18 per cent, slightly lower that the earlier estimate of 18 per cent to 19 per cent announced during the Q4FY25 results. Headcount and hiring plans: Wipro's total headcount declined by 114 sequentially to 2,33,232, while attrition rate slightly increased to 15.1 per cent from 15 per cent in Q4FY25. Earlier in January, Wipro said it plans to hire 10,000-12,000 freshers in FY26. Salary hikes: Wipro has not announced salary hike plans for the current cycle. It gave wage hikes in September 2024. Guidance: Wipro expects revenue from its IT services business segment to be in the range of $2,560 million to $2,612 million in Q2FY26. This translates to sequential guidance of -1.0 per cent to 1 per cent in CC terms. The Nifty IT index has declined 10 per cent over the last year compared to a nearly 3 per cent rise in the equity benchmark Nifty 50. On a monthly scale, the IT index has lost over 7 per cent against a 2 per cent decline in the Nifty 50. In the current uncertain milieu, it is too early to say with certainty that the worst is over for the IT sector, even as the sector is redefining its playbook. "A sharp 20 per cent rise in AI, cybersecurity, and cloud roles signals a pivot from volume hiring to skill-centric recruitment, with GCCs recording an 8-10% hiring jump, Abhishek Jain, the head of research at Arihant Capital Markets, observed. Jain underscored that Infosys stood out with $3.8 billion in deal wins, over half from new clients, and 7.5 per cent revenue growth, even as fresher hiring slowed and salary hikes stayed restrained at 5-9 per cent. Attrition remains a challenge, prompting targeted retention efforts. Much will depend on the demand environment in key markets such as North America and Europe, as well as the pace of AI-led transformation. "AI is no longer a buzzword but a driver of 5-15% productivity gains, influencing both service delivery and margins. The sector's next leap hinges on capturing AI-led transformation amid prolonged deal closures and cautious client spending," said Jain. Read all market-related news here Read more stories by Nishant Kumar Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
Time of India
4 days ago
- Business
- Time of India
TCS new benching policy: Employees face uncertainty, fear layoffs - here's what's happening
The exact impact of the benching policy on the TCS workforce remains uncertain. Tata Consultancy Services (TCS) employees are worried about layoffs as the first round of the new benching policy at India's largest IT services giant ends. Several TCS employees appear to be taking to social media platforms like Reddit to express their concerns about their role and future in TCS. The newly implemented benching guidelines effective from June 12 restrict the non-billable period to 35 days annually, beyond which employees could face professional setbacks or possible job loss. According to an ET report, employees have reported various challenges, including urgent project searches, assignments in mismatched skill areas, unsuccessful client interviews, and difficulties securing projects in preferred locations. A concerned Reddit participant was quoted as saying, "This is the first step towards employment rationalisation based on utilisation. Brace for layoffs." A new recruit shared, "I have recently joined TCS and training was conducted in Java. Now, it's not even a month on bench and RMG is pressuring me to join a *** support project, far from Java and Python." However, the financial daily could not verify the veracity of the posts on Redditt. What is the TCS Benching Policy ? Explaining the revised bench policy, TCS chief executive and managing director K Krithivasan told Times of India: "It's always been expected that associates take responsibility for their careers. While HR supports project placement, we also expect associates to proactively seek new assignments after completing existing ones. What you're seeing now is simply a more structured version of what's long been in practice. We aim to minimise bench time." Also Read | Infosys vs Cognizant fight gets uglier! Why are the two big IT firms battling it out in the US? Explained The company prioritises substantial investment in employee development. "Once we've made that investment, we work to ensure associates are deployed," he said. "While preferences are considered, projects are driven by client needs, not personal choice. We deploy based on training, demand, and skill alignment. If gaps exist, we work to close them before deployment." When questioned about TCS withholding salaries for staff on extended bench periods, Krithivasan offered no direct response. TCS Benching Policy Impact The exact impact on the TCS workforce remains uncertain. Based on industry data, approximately 15-18% of employees at major Indian IT companies typically remain on bench. TCS, which leads India's IT sector, currently employs around 613,000 individuals. Last week a workers' rights organisation approached Union labour minister Mansukh Mandaviya, requesting immediate intervention regarding TCS's bench policy, which they described as "inhumane," "exploitative" and mentally taxing for technology professionals. Nascent Information Technology Employees Senate (NITES) submitted a formal complaint to the minister, claiming that TCS is pressuring benched employees through termination threats and withholding experience certificates if they cannot secure project assignments within specified timeframes. Also Read | TCS gives out variable pay! Over 70% employees to get 100% variable; no decision yet on salary hikes "These are not non-performing employees, but skilled professionals who find themselves temporarily without allocation… Instead of support, they are met with suspicion, coercion, and threats," NITES president Harpreet Singh Saluja said in the letter. Some staff members are however backing TCS' decision, noting that numerous employees have stayed unassigned for extended periods, turning down offered projects. These individuals have used their unallocated time for pursuing additional qualifications whilst not contributing to the organisation's productivity. "This may help TCS trimming some seriously underperforming resources, those stuck on TCS like a leech," a Reddit user posted. TCS Benching Policy: Industry Impact The IT sector anticipates significant changes as artificial intelligence (AI) begins to automate routine operations. "We expect IT companies to become stricter with their bench policies due to the soft business environment and AI-led demand for advanced skill sets," Pareekh Jain, founder and CEO of EIIRTrend told ET. He observed that staff expenses are notably affecting company profit margins. The stringent bench policy implemented by TCS might influence other IT firms, as managing bench strength becomes increasingly challenging due to AI-driven productivity improvements making it harder to reassign entry-level engineers, according to industry specialists. "Tech companies must continuously align their employees' skill sets with evolving client needs. By revisiting their bench policies, organisations are encouraging employees to reskill and stay relevant in high-demand areas such as AI, cybersecurity, and digital engineering," said Nitin Bhatt, technology sector leader at EY India according to the financial daily's report. "Going forward, tenure and grade-based promotions and merit increases will likely be replaced by assessments of skills proficiency and competencies required to take on new roles," he added. Also Read | 'Character assassination': Delhi HC asks Wipro to pay Rs 2 lakh for defamation of ex-employee; termination letter full of 'stigma and insinuations' Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Mint
4 days ago
- Business
- Mint
World's top companies are realizing AI benefits. That's changing the way they engage Indian IT firms
Global corporations embracing artificial intelligence are reshaping their outsourcing deals with Indian software giants, moving away from traditional fixed-price contracts. The shift reflects AI's disruptive influence on India's $280 billion IT services industry, as focus shifts away from human labour and towards faster project completion. Fortune 500 clients waking up to AI's gains from fewer people and faster work are considering so-called time and material contracts which are based on actual time and labour spent—At least, before committing to the traditional fixed-price pacts. A time and material (T&M) contract is an agreement where a client pays a service provider based on the actual hours worked by their team and the cost of materials or resources used, rather than a fixed upfront price for the entire project. 'There are some (contracts) where we do based on the outcome. There are some customers that expect that this is better to do it on T&M (time and material)," said K. Krithivasan, managing director and chief executive of TCS, during the company's post-earnings conference call with analysts on 10 July. As agentic AI evolved, clients also want to see how they are able to benefit from the results," Krithivasan said. 'So, they want to do it on T&M. And then after a period of time, move towards the fixed-price model. So, we are seeing both options here." The change reflects the disruption that AI is causing for India's $280-billion information technology services industry. And it comes when clients are still cautious about discretionary spending amid global uncertainty and AI risks. LTIMindtree, too, saw similar changes in its contracts with clients. 'I saw a positive response when the discussion was about converting some of the time and material contracts to managed services and output-based construct," said Venu Lambu, managing director and chief executive officer of LTIMindtree, in an interview with Mint on 18 July. According to Lambu, this was driven by an AI-led solution provided by the company. 'Our clients are excited about it; so they want to hear more from us, and they want to see how we can help them to transition from the time and material contract to a more outcome or managed services-based construct, and we see that as a big opportunity," said Lambu. Both TCS and LTIMindree had a mixed first quarter of FY26. TCS ended with $7.42 billion in revenue in the three months through June, down 0.59% sequentially, whereas LTI Mindtree reported a revenue of $1.15 billion, up 1.97% on a quarterly basis. The revenue breakup of Wipro Ltd, India's fourth-largest IT services firm, over the last two years also shows how IT sector contracts are changing. Wipro's share of fixed price contracts reduced to 52% of overall revenue at the end of the three months through June from 56% at the end of the April-June 2023. During the same time, its share of time and materials contracts increased to 48% from 43%. 'Clients agree to this as it shifts the risk to the IT service providers for cost overruns and scope creep, and forces the service providers to generate the productivity that AI promises," said Peter Bendor-Samuel, founder of Everest Group. As of now, IT service providers get paid in a staggered manner rather than a lump-sum amount at the end of the year. Such instances of deferring payments arise due to macroeconomic uncertainties, which might compel companies to service their payment obligations to their IT vendors at a later date. According to Phil Fersht, chief executive of HFS Research, the change in ways through which companies engage with IT firms is brought about as clients seek lower prices from IT outsourcers. 'Enterprise customers are demanding lower prices from their service partners, which is shifting the focus away from the provision of people-based effort to the provision of the actual work," said Fersht. AI is also prompting companies worldwide to use fewer people in operations as automation is replacing manual, redundant labour. For IT outsourcers, this poses a challenge as they are traditionally billed on the basis of the number of employees deployed for the client. 'Net-net, if customers demand a 20% price-cut, the only way the likes of TCS and LTIMindtree can deliver on those savings, while maintaining their own profit margins, is with the smart use of AI to provide the same services with fewer people," said Fersht. 'That means the way these contracts are developed needs to shift from pay-per-FTE (full-time equivalent) to a consumption-based model, which we at HFS are terming 'Services-as-Software.'" Bendor-Samuel, however, expects the trend of changing contracts to fizzle out: 'It is unlikely to be a permanent trend as outcome and fixed pricing is more complicated and, over time, the FTE or time-based models, which are far simpler, are likely to win out."
News18
15-07-2025
- Business
- News18
TCS Rolls Out 100% Variable Pay In Q1 To Over 70% Of Employees; Details
Last Updated: Tata Consultancy Services, India's largest IT services company, has announced 100% variable pay for more than 70% of its employees; Details TCS Variable Pay 2025: Tata Consultancy Services (TCS), India's largest IT services company, has announced 100% variable pay for more than 70% of its employees for the April–June quarter, the Economic Times reported. For the remaining staff, payouts will be determined based on the performance of their respective business units. 'All employees up to C2 grade (or equivalent grades) covered under the QVA plan will receive 100% of the Quarterly Variable Allowance (QVA). The individual payout for the C3 grade and above may vary, depending on business performance," chief human resources officer Milind Lakkad stated in an internal email, as reviewed by ET. TCS follows a structured grade hierarchy beginning with trainees at the Y level, moving up to systems engineer at C1, and then ascending through C2, C3 (A & B), C4, C5, and finally senior management levels. Those in the C3 and above bands are typically considered senior employees. Despite timely quarterly variable payments, the company is yet to announce its annual wage hikes amid ongoing macroeconomic challenges that have weighed on its revenue in dollar terms for three consecutive quarters. TCS added 5,060 employees in Q1 FY26, bringing its total workforce to nearly 613,000. Krithivasan, however, remained cautiously optimistic, stating that discretionary tech investments — key drivers for software services firms — are expected to recover once macro clarity emerges. view comments First Published: July 15, 2025, 10:15 IST Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to our Terms of Use and Privacy Policy.
Mint
14-07-2025
- Business
- Mint
HCLTech starts the year strong, but margins raise worry
HCL Technologies Ltd reported better-than-expected revenue in the June quarter and now sees full-year growth at 3-5% against 2-5% earlier, but the management lowering its full-year profitability by 100 basis points was a sore spot. On Monday, the country's third-largest information technology (IT) services company reported $3.55 billion revenue for the June quarter, up 1.34% sequentially. The performance exceeded expectations of 37 analysts polled by Bloomberg, who expected HCLTech to report $3.53 billion in revenue. This was its best first quarter in six years. HCLTech performed better than larger peer Tata Consultancy Services (TCS) in a lumpy first quarter because of its Europe business, and expects a stable FY26 despite lingering macroeconomic uncertainty. TCS ended the first quarter with $7.42 billion in revenue, down 0.59% sequentially. The Noida-headquartered company's management sounded confident. 'We observed that the environment remains stable from an overall perspective, with some variations across specific verticals. It also did not deteriorate as feared at the start of the quarter,' said C Vijayakumar, chief executive of HCLTech, as part of his prepared remarks during the company's post-earnings press conference on Monday. Vijayakumar's commentary is in contrast to TCS chief executive K. Krithivasan, who called out delays in decision-making and project starts with respect to discretionary investments. The HCLTech management narrowed its revenue guidance for the full year. The company now expects revenue growth between 3% and 5% in constant currency terms, higher than its 2% guidance on the lower end it had called out in April. Constant currency does not take currency fluctuations into account. While TCS's Krithivasan said that non-essential tech spending, which is crucial in boosting revenue of homegrown IT outsourcers, must be back once uncertainty lifts, Vijayakumar was optimistic of growth along expected lines. 'We are optimistic about meeting a revised guidance supported by our superior revenue growth and positive booking expectations for the upcoming quarters,' said Vijayakumar. For now, most of the company's incremental business of $47 million came from businesses based in Europe, which contributed 87% of it. HCL gets almost a third of its business from Europe. In terms of verticals, much of the incremental revenue came from banks and financial institutions, which makes up a little more than a fifth of the company's business and is its largest cash cow. HCLTech got $766 million from financial institutions last quarter. However, there were bigger causes of concern. The Noida-based IT outsourcer reported $450 million in net profit, down 9.3% sequentially. This was the company's second successive quarter of net profit decline. HCLTech's operating margins also raised concerns. Its profitability declined 160 basis points to 16.9% during the quarter. One basis point is a hundredth of a percentage point. The company even reduced its operating margin band to 17-18% for the full year as against its 18-19% target in April. Chief financial officer Shiv Walia called it one-time impact, attributing the drop to a bunch of factors, adding 'specialized hiring as well as skill and location mismatch and a one-off impact of customer bankruptcy' caused the margins to drop, among other smaller factors. While the software products business is historically its primary margin booster, operating margins for this vertical declined 190 basis points sequentially to end at 22.4% for the June quarter. Notably, HCLTech is one of the few large IT outsourcers that has a sizeable reliance on selling and licensing revenue of software products. Its revenue from its software business fell 4.6% on a quarterly basis to $330 million; still, the bigger impact of this arm is on the company's operating margins. Unlike TCS, HCLTech reduced headcount in the quarter. The company cut staff by 269 in the April-June 2025 period to end with 223,151, whereas TCS added 5,090 people in the first three months of the fiscal to end with 613,069 employees. Two of the country's three largest IT outsourcers adding headcount implies better signs ahead. More headcount in an IT services company means more demand for IT services and vice-versa. This increase in headcount comes on the backdrop of a tariff war started by US president Donald Trump coupled with geopolitical uncertainties. Both have put IT spends of large companies, many of whom count HCLTech as their IT vendor, in limbo. The company also highlighted a restructuring plan that was put in place. 'The restructuring consists of two components. One is a lot of facilities that we are not utilizing, mostly in locations outside India, is something which we believe we should optimize, because we have not been using some of these facilities, especially some of it related to our acquisitions,' said Vijayakumar. He also mentioned that the headcount would be cut because of the programme, in order to get to the company's 18-19% operating margin aspiration. 'The second is also that there will be some talent ramp-down that has happened, especially in some of the geographies outside India,' said Vijayakumar, adding that the upper end of its guidance factored a cost component to its restructuring programme. Like TCS, HCLTech did not call out orders or revenue from Gen AI, but announced a dividend of ₹ 12 per share. The company's shares fell 1.41% to close at ₹ 1,614 on Monday. The 30-share benchmark BSE Sensex index closed 0.3% lower at 82,253.46 points. The earnings were announced after market hours.
