More Employees Left Infosys In Q2 Than Its Rival TCS; Headcount Drops By 7,530, Attrition Eases

Indian IT companies are in a trifecta conundrum of slower growth, challenging macro conditions and weakening in tech spending from clients. Amidst this situation, many of these companies are facing huge drops in headcount and the numbers are staggering in tech biggies like TCS and Infosys. But interestingly, more employees in Infosy who announced its financial results on Thursday, have left the company in Q2FY24 than compared to its rival Tata Consultancy Services.

After TCS, Infosys also witnessed reported single-digit growth across the bottom-line and top-line front during Q2FY24. Both Infosys and TCS attrition rates have eased in Q2FY24 and are more or so along similar lines. Both the tech giants have also intimated about their continued focus on the opportunities of artificial intelligence. But Infosys had let go more employees than TCS, and the difference between the two is 1,197 jobs.

As per the financial results, Infosys revealed that its headcount stood at 3,28,764 as of September 30, 2023 --- lower by 7,530 employees than compared to the headcount of 3,36,294 as of June 30, 2023 quarter. On a year-on-year basis, Infosys had to let go of a massive 16,454 employees compared to 3,45,218 headcount as of September 30, 2023.

The quarter-on-quarter drop in Infosys headcount is higher by 1,197 employees than compared to its rival TCS under which a total of 6,333 employees exited in Q2FY24.

The Tata Group-backed tech player's workforce stood at 608,985 as of September 2023, which is down by 6,333 employees from the headcount of 6,15,318 as of June 30, 2023. Also, the workforce is down by 7,186 employees from a headcount of 616,171 employees in the second quarter of FY23.

With the decline in headcount, Infosys IT services attrition rate has slipped sharply to 14.6% in Q2FY24 versus 17.3% in Q1FY24. The company's attrition has contracted by a steeply 1,250 basis points as against an attrition rate of 27.1% in Q2FY23.

Infosys attrition is not too far from what TCS has witnessed in Q2FY24 whose rate is at 14.9% for the last twelve months. TCS' latest attrition print indicates a sharp decline from the rate of 17.8% in Q1FY24 and 21.5% in Q2FY24.

While the workforce continues to be squeezed in the tech firms, both Infosys and TCS have conveyed the message of focusing on tapping Gen-AI. On Wednesday, TCS claimed that they now have a 100,000-strong pool of Gen-AI Ready consultants and prompt engineers.

On Thursday, after the Q2 results, Salil Parekh, CEO and MD at Infosys said, "Strong H1 performance with significant large deal wins, builds a solid foundation for the future. The growing adoption of our Generative AI offering, Topaz, is helping us deliver consistent value and expand market share."

He also added on overall Infosys performance that "We had our highest large deals value at $7.7 billion in Q2 spread across all verticals and geographies. This, in an uncertain macro-environment, is a testament to our ability to pivot and stay relevant to the evolving client needs, by delivering the benefits of transformation as well as productivity and cost savings at scale."

During Q2FY24, Infosys delivered $4,718 million in Q2 revenues with year-on-year growth of 2.5% and sequential growth of 2.3% in constant currency. Large deal TCV for the quarter was $7.7 billion, with a net new of 48%. Operating margin for the quarter increased by 40 bps sequentially to 21.2%. FY24 revenue guidance revised to 1.0%-2.5% and operating margin guidance retained at 20%-22%.

In rupee terms, Infosys posted a consolidated net profit of Rs 6,212 crore which is attributable to the owners of the company, registering a growth of 4.5% QoQ and 3.2% YoY. Consolidated revenue stood at Rs 38,994 crore in the quarter under review, posting a growth of 2.8% from Rs 37,933 crore in Q1FY24 and also climbed 6.7% from revenue of Rs 36,538 crore in Q1FY24.

In Q1FY24 alone, six Indian tech firms such as TCS, Infosys, HCL Tech, LTIMindtree, L&T Technology Services and Wipro cumulatively registered a decline in workforce by 18,000 employees which is steepest in the past three years.