With AI reshaping work, can Indian IT giants adapt?
India's tech talent pool, long considered the backbone of the country's IT industry, is witnessing an unprecedented exodus. The latest earnings reports from the three leading IT giants – Tata Consultancy Services, Infosys, and Wipro – reveal a staggering 64,000 employees exiting their ranks in the fiscal year 2024 (FY24).
This exodus, the first of its kind in two decades, is a stark contrast to the industry's historical ability to attract and retain top talent. The reasons behind this trend are multifaceted, reflecting the changing environments of the tech landscape and the evolving aspirations of the workforce.
The global economic slowdown and tighter tech spending by clients have forced these companies to take a cautious approach to hiring, and, in some cases, workforce reductions.
Wipro, for example, has seen a decline in headcount for the second year in a row, with a loss of 24,516 employees in FY24. "The macroeconomic environment remains uncertain," acknowledged Srinivas Pallia, Wipro's newly appointed CEO and Managing Director. "However, I am optimistic about the opportunities that lie ahead."
TCS, India's largest IT company, also saw a decline of 13,249 employees in FY24, with 1,759 employees leaving in the fourth quarter alone.
"In a challenging environment, we persisted with our long-term investments in workforce reskilling, research and innovation," said Samir Seksaria, Chief Financial Officer, Tata Consultancy Services.
Similarly, Infosys lost 25,994 employees, including 5,423 in the final quarter.
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This cautious optimism is mirrored by mixed signals in hiring data. According to a new study by Flexiple, Indian tech companies are expected to witness a 46% hiring boom in 2024, despite 31% of engineers experiencing a hiring freeze.
Shifting talent preferences, AI disruption
While some say IT giants overhired during the pandemic boom, experts believe the exodus reflects a deeper trend. Prabir Jha, Founder & CEO of Prabir Jha People Advisory, argues a fundamental shift in skills is needed due to AI, making the current talent pool less compatible.
Jha believes that 50-70% of traditional IT jobs could become redundant due to AI capabilities in areas like requirements gathering, design, and construction. "So the talent mix needed has undergone a major change, and the recent exodus is reflective of this shift, as well as some dip in discretionary spending globally," he adds.
Given these talent dynamics, Jha expects the exodus trend to continue until the tech industry reaches a new equilibrium. "The annual reports of most tech leaders are all talking about generative AI. It is reflective of the future unfolding," he states. As IT companies adapt their strategies to align with the AI-driven future, the nature of talent acquisition and retention may undergo a transformation.
The employee exodus is expected to persist until the tech moloch finds a new balance. Leading tech companies signal this shift, with their annual reports highlighting gen AI as a key influence on the industry's future - Prabir Jha
Beyond economic factors, the exodus also reflects a shift in young professionals' preferences. Today's talent seeks more dynamic environments. This shift propels them towards startups, product companies, and niche firms that offer challenging roles, flexible work arrangements, and a greater sense of ownership.
The road ahead for Indian IT
As the tech landscape continues to evolve, Indian IT giants face further disruption. Adapting to changing talent preferences and the resulting skill gaps is crucial for their long-term success. The focus on upskilling needs to be the norm, not the exception. For instance, TCS employees have clocked 51 million learning hours, acquiring 5 million competencies, per their quarterly report.
The coming years will test the resilience and adaptability of these tech titans as they navigate the uncharted waters of a rapidly transforming industry. How they respond to these challenges will shape the future of India's IT sector and its position in the global tech arena.
