What Accenture’s hiring spree means for the Indian IT industry

Accenture had 799,000 employees as of November 2024, adding 24,000 employees between June and August 2024 and 25,000 employees in the three months to November 2024. New hires in the past six months alone account for about 6% of its headcount.

Accenture follows a September-August fiscal year.

Restore on card?

India’s $254 billion software services industry, which includes well-known players such as Tata Consultancy Services (TCS) Ltd., Infosys Ltd., HCL Technologies Ltd., Wipro Ltd. and Tech Mahindra Ltd., has been hit hard due to macroeconomic uncertainty. Last year’s revenue growth was the slowest, at 3.3%.

TCS, Infosys and HCLTech reported revenue of $29.1 billion, $18.6 billion and $13.3 billion respectively for the year ended March 2024, up 4.1%, 1.9% and 5.4% year-on-year. Wipro and Tech Mahindra reported year-on-year decline in revenue, with revenue rising 3.8% and 5% to $10.8 billion and $6.3 billion respectively.

Some analysts say the economy is expected to recover.

“While a strong recovery in discretionary demand may take several quarters, we believe the situation is unlikely to deteriorate further,” Nomura analysts Abhishek Bhandari and Krish Beriwal said in a Sept. 19 note. We It is believed that a possible easing in U.S. corporate decision-making after the U.S. elections in September 2024 and November 2024 may stimulate demand. “

Rehiring is an indicator of growth, suggesting that local IT services companies are also likely to post better growth in the next financial year.

“Given the full employment situation in the U.S. and the economic stimulus expected from the 2025 tax cuts, I expect Indian IT and U.S. enterprise customers to have a good year,” said Phil Fersht, CEO and principal analyst at HFS Research.

As the IT industry recovers, software companies will need to increase their headcount to meet growing demand.

“Growth has bottomed out and recovery is just around the corner. While additional headcount will now be needed to meet the additional demand for technology services, the only uncertainty is the pace of recovery.” Pramod Guppy, Founder, Marcellus Investment Managers Gubbi said.

“Accenture’s strong headcount does suggest improved demand. But demand may still be less widespread as Accenture’s hiring may be in line with recent strong bookings, where Accenture may beat its Indian peers. That said, India IT services companies should also continue to increase their headcount as they rebuild their workbenches and revise their pyramids,” said Abhishek Kumar, equity research analyst at JM Financial Ltd.

Expanding the workforce amid growing demand

Indian IT services companies have started increasing their headcount to cope with the growing demand for their services.

Four of the country’s top five IT services companies, including TCS, Infosys, Wipro and Tech Mahindra, have increased their headcount since the current financial year started in April.

TCS added 11,178 employees in the first two quarters of FY25 as against a loss of 5,900 employees in the same period last year. TCS had a total headcount of 612,724 employees as of the September quarter. The company has outlined plans to recruit 40,000 employees in the current financial year to March 2025.

Bengaluru-headquartered Infosys added a net of 598 jobs in the first half of the current fiscal year, compared with a headcount reduction of 14,470 in the first half of the previous fiscal year. The company had 317,788 employees at the end of the September quarter. The company plans to recruit 15,000 to 20,000 fresh graduates in the year ending March 2025.

Wipro has added 1,315 employees since April this year. In the first half of the last fiscal year, the company laid off 13,863 employees. As of September 2024, the number of employees was 233,889. The Bengaluru-based IT services company aims to add 12,000 freshers by the end of this financial year.

Pune-based Tech Mahindra Ltd has added 8,818 employees since the beginning of the current financial year. There were a net loss of 1,796 jobs in the first half of the last fiscal year. Tech Mahindra had 154,273 employees in the three months to September 2024.

In contrast, Noida-based HCLTech, the country’s third-largest IT company, reduced its headcount in both the first half of this fiscal and the previous fiscal. The company cut 8,860 jobs this fiscal year after exiting a joint venture with Boston-based financial services provider State Street. The company cut 4,805 jobs in the first half of fiscal 2024. The company had 218,621 employees at the end of the September quarter. Despite the reduction in headcount, the company still plans to add 10,000 new employees by the end of this fiscal year.

Accenture taps into India’s technology talent pool

Now, Accenture management attributes its third consecutive quarter of hiring to a pickup in its business.

Accenture Chief Financial Officer Angie Park said in a post-earnings conference call with analysts on the 19th: “So we did add about 24,000 employees in the first quarter, which does reflect the growth we have in our business. See the momentum.” December.

Accenture reported revenue of $17.7 billion for the three months ended November 2024, up 7.8% from the previous quarter.

The New York Stock Exchange-listed company, which has most of its new talent coming from India, where most of its employees are based, did not mention what percentage of the new talent came from acquiring new companies.

“Going forward, we will continue to hire based on the demand we see and the skills required. I will give you a little more context, the hiring we are seeing this quarter is similar to last quarter, primarily in India,” Parker said.

The company attributes its hiring from India to availability of skilled talent.

“So they are really looking for optimization of the right skills, because a big part of why people use India is skills-related, right? 10 years ago, it was labor arbitrage, right? Today, the issue is the ability to acquire those skills at scale.” Accenture Chief Executive Officer Julie Sweet said during the company’s post-earnings news conference while fielding questions about customers who want employees to work from their locations.

While Sweet considers India’s talent pool to be highly skilled, placement officials at the country’s engineering colleges, which provide labor to these companies, stress that there is a growing demand for such highly skilled talent.

Sridhar KS, director of placement and training at PES University, Bengaluru, said: “Companies today prefer to hire students who are proficient in technologies such as artificial intelligence, machine learning and data analytics as these technologies can be used in various fields across different fields.”

A second placement officer said there has been an increase in demand for skilled graduates.

“Now, these companies are asking us for technical talent more than in the past because there are a lot of new technologies,” said Ranganath D, internship dean, RV College of Engineering, Bengaluru. “Today, companies need students who are proficient in artificial intelligence, data analytics and machines. study, we encourage our students to take such courses.”