Indian IT companies tighten bench policies as client spending slows
NEW DELHI, INDIA — India’s top information technology services companies are revising their bench policies, reducing the duration of time employees can remain unassigned to projects.
According to a Mint report, this strategic move aims to cut wage costs as client spending continues to decline.
Traditionally, IT firms allowed employees to stay on the bench for up to four months. However, companies like HCL Technologies have now shortened this period to two months, prompting employees who fail to secure projects within this timeframe to leave.
Impact on utilization rates and employment
The reduction in bench time has led to improved utilization rates, with firms such as Infosys, Wipro, and LTIMindtree reporting increases in the percentage of staff actively working on projects.
Despite this, Tech Mahindra experienced a slight decline in its utilization rate. The shift in bench policies is indicative of a broader jobs slowdown in India’s tech sector, which has cooled since the pandemic-driven hiring surge.
The $254-billion Indian software services industry grew at a mere 3.8% at the end of March, marking its slowest growth rate in recent years.
Industry leaders respond to market conditions
Industry leaders acknowledge the need for optimization in response to the changing market dynamics.
Sandeep Kalra, CEO of Persistent Systems, emphasized the importance of optimizing workforce deployment, stating, “If we cannot give someone a career path, they are better off going somewhere else.”
Similarly, K. Krithivasan, CEO of Tata Consultancy Services (TCS), noted that clients are increasingly cautious, leading to program ramp-downs and re-evaluations.
Performance-driven workforce management
The revised bench policies also focus on performance, with companies using this opportunity to phase out poorer performers.
Phil Fersht, CEO of HFS Research, highlighted the industry’s shift towards leaner operations, stating, “The onus across all the service providers is to run leaner benches and reduce costs on staff who are simply not being used.”
This approach is not only about cost-saving but also about ensuring employees are engaged, upskilled, and aligned with the company’s objectives.
Future outlook for Indian IT
The tightening of bench policies is expected to impact employment in the IT sector further. Major companies like TCS, Infosys, and Wipro reported a combined workforce reduction of 63,759 employees in the year ending March 2024.
Despite these challenges, industry experts like Krishna Vij, vice president of IT staffing at TeamLease, stress the importance of optimizing talent deployment to meet evolving market demands effectively.
As the sector navigates these changes, the focus remains on balancing cost efficiency with maintaining a skilled and engaged workforce.
