Big IT's headcount growth is highest ever in July-Sept

The quarter ended September ’06 has witnessed the highest-ever increase in the combined headcount of Infosys, TCS, Wipro and HCL Technologies. The net additions by these four software majors were 23,150 this quarter, as compared to 15,800 in the previous quarter.

According to analysts, expectations of buoyant growth, along with a high churn rate in the industry, have resulted in companies increasing their headcount by such large numbers.

These four companies now have a combined employee base of around 2.4 lakh, a growth of 38% over the corresponding quarter last year. The growth in the number of employees, however, was less than the combined 46% y-o-y topline growth. Revenue per employee, therefore, has also witnessed an increase in the last twelve months, especially in the case of Infosys and Wipro.

The massive increase in headcount during this quarter has taken place primarily because of Infosys adding more than 10,000 employees this quarter. HCL Tech’s BPO division, too, saw its highest quarterly addition in employees.

According to Sunil Chandiramani, national director and partner, Ernst & Young, “Headcount addition depends on two things, business expectations and attrition levels. Today, companies have highly sophisticated systems put in place to gauge the manpower needs in the coming quarters, and they factor in attrition levels and growth expectations while estimating manpower requirements.”

Going by past experience, it is not necessary that employee additions would be this high in the coming quarters as well. The headcount addition seems to follow a certain pattern, wherein the September- ended quarter of every year witnesses a large increase in employee numbers. For instance, in the September-ended quarter last year, nearly 20,000 employees were added but employee addition slowed in the following three quarters.

FY05, too showed the same trend in employee additions. According to experts, such a trend in employee additions follows a similar cyclical pattern of attrition levels that depends on the salary and bonus announcements in the companies.

Attrition levels, however, have been increasing steadily in some companies. In Infosys, for instance, employee attrition grew to 12.9% in the September-ended quarter, compared to 11.9% in the previous quarter. Attrition rates in the company have been increasing since the September-ended quarter last year.

Talking to analysts after the announcement of its second quarter results, TV Mohandas Pai, director -human resources, education and research and administration, Infosys, cited the fact that the attrition levels in this quarter are high largely because a number of people leave the company for higher education during this quarter.

Moreover, there are a some people who were not able to pass the test after their training was over(they were considered a employees the time they joined). The third factor is the high attrition among the employees who have been appraised to be in the bottom 5%.

The growth in the number of employees this quarter is in line with the yearly projections made by the top five IT companies with an estimated 1,00,000 software professionals to be hired this financial year.

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