Amid uncertainties and job cuts in the IT sector, Persistent Systems has implemented a wage hike for its employees for FY24 — average hike of 7.5% in India and a 3.5-4% hike outside India. The wage hike comes into effect from July. Employees also got their annual bonus of around 109%. The hikes in FY23 in India were around 9% and 4-6% outside India.
The company has not reduced employee salary increases or bonus payments, Sandeep Kalra, executive director, Persistent, said. The company has also not deferred joining, he said. Around 800 freshers will be joining in the next couple of months and the company would be honouring all the offers. Freshers recruited in the last 12-15 months have been trained and were ready to be deployed. Around 1,000 lateral hires were carried out during the quarter.
The company posted a 3% sequential growth in revenues to Rs 2,321 crore during the first quarter of FY24 and is expected to maintain growth in the 3-5% range if the economy was good or at 2-4% if the economy did not perform as well.
During the June quarter, Persistent reported a sequential drop in profit margin to 14.9% against 15.4% in Q4FY23 and Ebit at 9.5% against 11.2% in the previous quarter. Sunil Sapre, executive director and CFO, Persistent Systems said a 50 basis points sequential drop in profit margin was on account of H-1B visa costs, which accounted for 40 bps. The remaining was attributed to the expansion of footprint in the country and taking facilities closer to employees, Sapre said. Persistent opened five new offices in FY23 in Indore, Jaipur, Ahmedabad and two satellite offices in Bengaluru, along with a presence in the NCR region through acquisitions.
The company also incurred a one-time expense during the June quarter for events held across the US and Europe to mark the $1-billion revenue milestone for clients and gifts given to employees on reaching the milestone, Sapre said. Employees received gifts such as exercise bikes, ear pods and travel accessories to mark the celebrations.
Total headcount at the end of the first quarter was 23,130 with employee utilisation at 78%.
The company also saw a marginal sequential drop in total contract value (TCV) and annual contract value (ACV) during the June quarter which Sapre attributed to delay in decision-making and spilling over of deals from Q1 to Q2.
The order booking during the June quarter was $380.3 million in TCV ($420 million previous quarter) and $271.9 million in ACV ($310 million previous quarter). These deals have not gone off the radar and Sapre was confident of closing deals in the subsequent quarters and spends coming back in the latter part of the year. During Covid, clients were aggressive and invested in two years what they would have invested in five years and they were now taking a pause re-organising their priorities, Sapre said.
The company is working on optimising costs, reducing sub-contracted jobs, which it had done during the to access some niche skills. They would be reducing dependence on outside talent and this would lead to a 10-15% reduction in costs, Sapre said.