Mint’s analysis shows the share of young workers in TCS’s workforce has fallen from 59% in FY22 to 50.3% in FY24. For Infosys, that’s a drop from 60% to 55% over the same period.
Analysts attribute this drop to low fresher hiring and weak growth of IT services companies in the fiscal gone by, and not so much to the advance of artificial intelligence (AI) or generative AI taking over entry-level jobs.
“In an environment when the IT services sector’s growth was fast until 2022, companies knew that there were projects to deploy new hires so they would hire more. Now growth expectation are low, which is why the fresher intake is low. Once growth revives, the younger employee headcount might pick up,” said Pankaj Kapoor, senior vice-president and head of strategy, investor relations & ESG, at Mumbai-based business process management company Firstsource.
Kapoor, who has tracked the Indian IT services industry for almost two decades, also said, “GenAI is not having an impact on fresher hiring as of now.”
An email sent to TCS went unanswered, whereas the Infosys spokesperson said its responses to Mint’s questions were covered in its annual report.
How the numbers were analysed
IT services companies have anywhere between 75% and 85% of their workforce based out of India.
For instance, Cognizant Technology Services Corp had 254,000 employees or 73% of its 347,700 workforce working out of India at the end of December 2023, according to its annual report.
Bengaluru-based Infosys, which is yet to disclose the geographical distribution of its employee numbers for last year, had more than three-fourths of its global employee count of 343,234 in India at the end of March 2023, according to its annual report filed with the US Securities and Exchange Commission (SEC).
At peer Wipro Ltd, about 82% of its 234,000 workforce, or 193,000 employees, is based out of India, according to the company’s annual report filed with the SEC.
Analysts maintain that for TCS, a similar percentage of its 601,546 employees are based out of India.
TCS and Infosys are the only top software services companies that disclose the age distribution of their workforce.
TCS disclosed in its FY24 annual report that its India workforce had 50.3% people less than 30 years of age. The company’s total workforce in India, assuming three-fourths of its employees are stationed here, would translate to 451,160 employees. Back-of-the-envelope calculations show that of this, 226,933 people are less than 30.
Likewise, TCS’s annual reports for the previous two fiscals show that its share of India workforce aged 30 years or less was 59% at the end of March 2022, and 53% at the end of FY23.
At Infosys, more than half its global workforce of 317,240 employees are of 30 years and less in FY24 as compared with the financial year through March 2022 when 60% of its employees, or 187,271 of them were aged 30 or less.
Why this is happening
At least three analysts maintain that this is not a structural change because reduction in young workforce is linked to a company’s growth and, for now, GenAI is not having a direct impact on fresher hiring.
“The number of employees aged 30 years and below has dropped due to low hiring of freshers from the peak levels post-pandemic,” said Apurva Prasad, vice president of institutional research at HDFC Securities.
TCS and Infosys hired about 40,000 and 12,000 freshers, respectively, as of March 2024, compared with 78,000 and 55,000 hired in the 12 months through March 2022.
Another analyst attributed the reduction of freshers to low growth of Indian IT outsourcing companies.
India’s IT sector grew 3.8% to $254 billion at the end of March 2024, which is its slowest growth rate in the past 25 years, estimated Indian IT industry body National Association of Software and Service Companies (Nasscom).
Tata Consultancy Services, Infosys, and HCL Technologies Ltd reported a dollar revenue growth of 4.1%, 1.9%, and 5.4%, respectively, last year whereas Bengaluru-based Wipro reported a full-year revenue decline of 3.8%.