The country’s second largest IT services firm, Infosys has around 60% of employees in the age bracket of under 30, which is the highest, followed by Tata Consultancy Services and Wipro, where the same is at 53%. According to a recent report by Morgan Stanley, HCLTech has the lowest percentage (41%) of employees in this bracket, followed by Tech Mahindra (48%).
This suggests that HCLTech, and Tech Mahindra have greater scope to hire at junior levels. Of late, large IT service companies have been seeing their margins falling. It is common for IT companies to use the tool of pyramid optimisation — hire more at junior levels — to keep the wage bill in control, which will help in margin expansion.
Nilanjan Roy, CFO, Infosys, said recently that pyramid efficiency is one of the key five areas on which they are focusing comprehensively to expand the company’s margins.
Rohit Anand, CFO, Tech Mahindra, said recently, “When we look at the juniorisation opportunities of our pyramid structure we’ve articulated that that’s an area of improvement. As we go forward, we’ll continue to invest in that and make sure we bring more juniors into the organisation, driving the more efficient average resource cost that will help us give more productivity as we move forward”.
However, analysts said that slow growth has prevented IT companies from hiring employees at junior levels. In recent times, many IT companies have delayed onboarding of freshers. Even placement activities at engineering colleges have come down significantly this year.
Jefferies in a note talking about TCS and Infosys said that slower growth has impacted their ability to optimise pyramids, and thus limiting margin expansion in FY24.
Analysts at EIIRTrend, said, that all IT companies can leverage their pyramids to improve their margins, especially at a time when they are growing. There is a limit to juniorise workforce. Today when growth has slowed down and even attrition has stabilised, they can’t hire more freshers and put them on bench. Thus pyramid optimisation which used to be an effective tool to improve margins, lacks teeth at this time of slow growth.