A slowdown in hiring by India’s top IT companies led to a sharp increase in the industry’s profit per employee in the third quarter of financial year 2023 (Q3FY23), said a report by Business Standard.
As per the report, the top four IT companies —Tata Consultancy Services, Infosys, HCL Technologies, and Wipro — earned a net profit of ₹1.7 lakh per employee during October-December 2022, up 8.6 percent from ₹1.57 lakh in Q2FY23 and 16.3 percent from a record low of ₹1.47 lakh in Q1FY23.
Earnings per employee in the third quarter were, however, still down 0.9 percent on a year-on-year (YoY) basis, said the report, adding that in FY21, the top four firms earned a net profit of ₹1.95 lakh per employee during Q3.
The report further pointed out that the four IT companies together added only 1,940 employees in Q3FY23, the fewest in the past five years, barring the pandemic hit Q4FY20 and Q1FY21 when these companies had reported a decline in their headcount on a net basis.
The decline in hiring also resulted in an improvement in employee productivity as measured in terms of revenue per employee, reversing the trend of a fall in productivity in FY22, the report said.
The big four IT firms, as per BS, earned net sales of ₹10.16 lakh per employee on average in Q3FY23, up from ₹9.66 lakh in Q2FY23 and a 10-quarter low of ₹9.3 lakh in Q4FY22.
Also, the per-employee net sales in Q3FY23 were the highest ever for these four companies and nearly 8 percent higher than the 5-year average of ₹9.4 lakh per employee, the report added.
According to analysts, a slowdown in hiring resulting in a contraction in the overall headcount of a few companies and a decline in wage pressure are the factors that have helped the industry in Q3.