January 6, 2022
The Big Five jointly added 87,000 employees in 2020-21
Employee costs of BSE 500 listed companies increased by 18% in September 2021
The resultant increase in salaries could impact margins of companies over the next few quarters
Wipro and HCL Tech will see the highest decline in margins
As per an analysis by the investment group Jefferies, the Big Five tech companies – Tata Consultancy Services (TCS), Infosys, HCL Technologies, Wipro, and Tech Mahindra – will collectively add over 150,000-160,000 employees in FY22. This is an 83% increase from 2020-21 when these companies jointly hired 87,000 employees. In the first half of FY22, these companies have already hired over 110,000 employees, breaking the previous record of 90,000 new hires from 2018-19.
Jeffries’ analysis further shows there is an employment boom in the formal sector, as the employee costs of BSE 500 listed companies increased by 18% in September 2021 as compared to the same period of the previous year. This same trend was observed in the June quarter of 2021, where employee costs increased by 16.7% over the corresponding period in 2020.
This big hiring push and the resultant increase in salaries in the IT sector has been acknowledged as one of the reasons why IT companies’ margins could be impacted over the next few quarters. It is expected that Wipro and HCL Tech will see the highest decline in margins due to the substantial salary hikes the companies offered in the third quarter of FY22.