Cognizant and HCL Reduce Bench Time for Employees Without any projects. The Bench time refers to employees who are not assigned to any project. Including freshers as well who has been waiting for their first project assignments. The slowdown in client spending has caused many IT companies to cut down on how long employees can stay on the bench before they are let go.
In HCL Technologies, for instance, employees are able to spend less time on the bench without being assigned a project. Also, Cognizant Technology Solutions is strengthening its benched employee policies by helping benched employees find jobs, but requiring them to leave if they are unable to do so. As a result of this shift, the utilisation rate has increased, which measures the percentage of employees who are actively engaged in projects.
Persistent Systems Ltd’s CEO, Sandeep Kalra, highlighted the need to optimise resources. In a recent earnings call, he stated that if employees cannot be provided with a clear career path, it is better for them to seek opportunities elsewhere. This approach reflects a broader trend in the industry, where reducing the bench size is seen as a response to the current jobs slowdown in India’s tech sector.
After the ‘Great Resignation,’ when IT companies expanded rapidly to meet high demand during the pandemic, hiring has slowed. Due to lower demand from major clients, the Indian software services industry has seen its slowest growth rate of 3.8% for the year ending March 2024. In addition, clients are spending cautiously, which further dampens growth prospects.
Top executives from major IT firms have echoed these concerns. K. Krithivasan, CEO of Tata Consultancy Services (TCS), mentioned in a July earnings call that clients are scaling down or re-evaluating programmes with little notice. Similarly, Srinivas Pallia, Wipro’s president, noted that while the demand environment has not shifted dramatically, clients remain cautious, and discretionary spending is subdued.
It was traditional for IT companies to allow employees to stay on the bench for up to 120 days. In some firms, however, this period has been shortened to around two months. In the absence of a project within this timeframe, employees are often asked to leave their jobs. At HCLTech, those with strong performance ratings may receive extra time to find a project, while others may be asked to leave sooner.
The reduction in bench time and the emphasis on utilisation have led to an improvement in utilisation rates at companies like Infosys, Wipro, and LTIMindtree, with rates now ranging between 83% and 85%. However, Tech Mahindra reported a slight decline in its utilisation rate.
These changes are likely to have further impacts on employment in the IT sector, which has already seen significant job cuts. The combined workforce of TCS, Infosys, and Wipro decreased by 63,759 employees in the fiscal year ending March 2024.
While cost-cutting is a key driver behind these moves, there is also a focus on keeping employees engaged, upskilled, and aligned with the company’s goals. Krishna Vij, vice-president of IT staffing at TeamLease, explained that the aim is to optimise talent deployment to meet changing market demands, rather than simply removing employees who are not actively contributing.
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News Source: TechGig
