IT-giant HCL tries to fight attrition by compensating employees better
Indian IT-major HCL Technologies announced its quarterly results on Tuesday. It said in its financial statement that it had spent Rs 12,978 crore in the first quarter of this financial year on employee expenses. This is marginally higher than the Rs 10,708 crore spent on employees in the same quarter a year ago.
Not just in the whole of FY22, HCL Technologies spent Rs 46,130 crore on its workforce, which is also an increase from Rs 38,853 crore in FY21, an increase of 18.7%.
C Vijayakumar, CEO & Managing Director, HCL Technologies Ltd, said in HCL’s analyst conference call, “HCL’s margins in services were under pressure due to increase in talent costs and transition costs. Expected attrition to moderate in the first quarter but did not.”
As wage inflation troubles the IT sector, HCL’s management said it is in conversations with its customers to tweak delivery models and rates. “60% to 70% of our customers have understood us on wage inflation”, Vijaykumar said.
The company’s Chief Financial Officer(CFO), Prateek Aggarwal, stated that in the coming quarters, HCL’s focus would be on fresher billing, pyramid optimization, automation initiatives, and offshoring work to improve margins.
“We expect bill enhancement to pick up,” Aggarwal said in the earnings call on Tuesday.
Interestingly, this comes at a time when the IT major is tackling high attrition. In its investor release, the IT company said that attrition has gone up to 23.8%, from 11.8% one year ago and 21.9% in the last quarter of FY22. HCL hired 34,000 people, including laterals and freshers, in the previous 12 months. The company feels that attrition could be a problem for one more quarter.
In the investor call, the management stated that it plans to hire 10,000 more freshers in Q2 of the current financial year. This comes at a time when both attrition and employee benefits have increased.
As recession fears loom over economies across the globe, the management stated that the product and platforms business should help the company tide over any recession in other geographies.
“We have a well-balanced portfolio across geographies and verticals. Any kind of slowdown, Products & Platforms will continue to deliver. We have a significant deal pipeline which will help us do well in FY24 and the subsequent quarters of this financial year”, Vijaykumar stated in the earnings call.