Saturday, February 8, 2025

Q3FY25 Analysis and Impact of Trump 2.0 on India’s IT Industry

In a recent conversation with SightsInPlus Editor-In-Chief Romesh Srivastava and Milind Mutalik, Former Chief People Officer at Accolite Digital analyzed the Q3FY25 results of Indian IT companies and also discussed the Impact of the new USA Government, Trump 2.0.

Q3FY25 Results of Indian IT companies

Historically, the third quarter sees furloughs and resignations, balancing with discretionary spending. This time, despite expectations of lower results, outcomes have cautiously improved.

The top line aligns with projections, barring minor discrepancies with Tech Mahindra’s strategic changes, which led to a 3,700-employee reduction, while Wipro and TCS faced delays in onboarding fresh hires.

Conversely, Infosys and HCL increased their manpower. Net hiring across five companies exceeded 10,500 in the last nine months, indicating stability and growth potential.

This performance aligns with expectations, though significant changes are anticipated with the new US President and related policies.

Companies – Q3 FY23Net Profit in CoresAttritionHeadcounts
TCS12,38013.00%607,354
Infosys6,80613.70%323,379
Wipro4,59115.30%232,732
HCL Tech3,35413.20%220,755
Tech Mahindra98311.20%150,488
LTIMindtree1,08514.30%86,800

Watch YouTube Video for Comprehensive Analysis

Hiring Trends in Coming Quarters

TCS has announced 40,000 offers and plans to onboard these employees in phases. However, TCS’s attrition rate has increased to 13.5% from 12.5% last year, impacting new hiring.

Wipro’s attrition rate has also risen to 15.3% from 12.3% last year. Wipro is hiring from campuses, with plans to onboard 10,000 new employees.

HCL and Infosys are committed to hiring, with Infosys planning to onboard 15,000 new employees. Infosys’s attrition rate stands at 13.7%, while HCL’s is 13.2%. Overall, the attrition rates range between 13% and 15%, fueling growth through new additions.

Net hiring for the five companies in the last nine months has exceeded 10,500, indicating a positive trend compared to a reduction of over 50,000 in the same period last year.

Impact of New USA Government (Trump 2.0) on the IT Industry

The change in the US working model, influenced by leadership from Trump and Musk, is expected to impact Indian IT companies.

The major business verticals for these companies include BFSI (26%), consumer business and retail (13%), life sciences and healthcare (11%), manufacturing (12%), tech services (12%), and communication and media (12%). These verticals account for 86% of their business.

Additionally, 57% of their revenue comes from North America, with 28% from Europe.

Changes in the U.S., including job security concerns, return-to-office mandates, and cost-cutting measures, along with policies on work visas, immigration, technology, tariffs, and cultural shifts, will significantly impact the IT services sector.

Given that the U.S. is a major revenue source for the industry—especially in the BFSI sector—changes in these areas could either create opportunities or pose challenges for top IT organizations.

The shift towards contract employees and automation of administrative tasks may benefit Indian IT companies.

Job Security in U.S.

Job security is a growing concern for permanent employees in the US. The return-to-office policies and cost-cutting measures are expected to impact job stability.

The shift towards contract employees and the emphasis on performance-based retention, as seen with companies like Meta, may create opportunities for Indian IT companies.

However, the reduction in support for diversity, equity, and inclusion (DEI) initiatives under the Trump administration may pose challenges.

Despite these factors, Indian talent remains in high demand, and the need for skilled professionals is unlikely to change rapidly.

Companies will need to adopt cautious steps to navigate these changes and maintain growth.

Rising Attrition a Concern?

Current attrition differs significantly from the past. Previously, employees would typically move from one company to another. Today, many are joining startups or smaller organizations, leaving the corporate race to start their own ventures, or opting for early retirement.

High attrition no longer means other companies are gaining or losing employees; it reflects a shift in employee movement. This pattern is seen across the IT services sector. Attrition is also driven by productivity factors, with AI and new technologies increasing performance expectations.

For example, TCS has promoted many employees, while high attrition suggests that those not meeting standards have voluntarily left. An attrition rate of 15% is considered healthy.

With freshers joining, attrition is expected to dip. Freshers, making up 5% to 6% of the workforce, are unlikely to leave within the next one or two years, leading to a decrease in overall attrition rates and focused investments.

Net Profit and Gen-AI Projects and its Influence on Hiring

Management can significantly influence the bottom line, but the top line depends largely on client work and delivery. Comparing Q3FY25 performance to the previous year, TCS, HCL, and Infosys are doing better, while Wipro and Tech Mahindra are lagging slightly.

The five companies collectively are on track to meet last year’s revenue of $77.97 billion. AI and emerging technologies, particularly GenAI projects, are progressing, with 32% already in the implementation stage.

This progression is expected to positively impact business and hiring, especially in data management, cybersecurity, and cloud services, driving growth in the coming quarters.

Challenges and Opportunities in Coming Quarters

While discussing the top line, the five companies have a workforce of approximately 1.6 million. Adding 10% to this would require around 160,000 new hires. Finding the right talent, especially with 5-12 years of experience, remains a significant challenge.

Additionally, the rise of Global Capability Centers (GCCs) working on strategic and emerging technologies adds to the competition for talent. The supply-demand situation may lead to increased pressure on offers and talent acquisition.

Training freshers and campus hires are crucial to mitigate risks and ensure a robust talent pipeline. The last two years have seen low campus hiring, which affects talent availability for new projects.

Another challenge is the transition to mandatory work-from-office policies, with some companies already implementing this to varying degrees. This remains a subject for discussion and adjustment.


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Sahiba Sharma
Sahiba Sharmahttps://sightsinplus.com/
Sahiba Sharma, Senior Editor - Content at SightsIn Plus