20% of lateral movement from IT firms absorbed into GCCs and non-tech firms: Quess Corp

About 20% of the lateral movement from IT firms has been absorbed into global capability centres or GCCs and non-tech firms that are going digital, according to insights from Quess Corp.’s Skills Report FY23.

GCCs in India are rapidly growing in number and are estimated to employ over 3.6 lakh jobs in the coming year, as per industry reports. According to a ZinnovNasscom report, there are over 1,500 GCCs in India as of September 2022. This shift is also increasing regional diversity in the industry with a rapid expansion of tech talent footprint across tier-2 and -3 cities such as Jaipur, Coimbatore, Indore, and Kochi.

Despite global headwinds and geopolitical tensions over the past year, the Indian economy has remained resilient with the continued adoption of new-age technologies in FY23, according to the report.

The report reveals that the demand for specific technology skills is consistently rising even across nontech industries. ERP, Java Full Stack, Data Analytics, Cloud, and Infra Management have emerged as the top skills in demand.

Data from the report indicates that while FY22 saw a significant increase in workforce demand with many firms displaying “talent hoarding” behaviours, this momentum and speed of hiring has tapered down for traditional tech product-based companies in FY23. However, there has been an increase in technology adoption across non-tech industries. This has led to a redistribution of skills, resulting in a correction of demand for professionals and a decrease in associated price premiums within the IT sector.

The Noida-based IT services major posted a net profit of Rs 3,983 crore for the March quarter, up 10.8% from a year ago, but down 2.8% sequentially, amid a challenging business environment with clients cutting down on discretionary budget.

The revenue for the March quarter was up 17.7% from the year-ago period to Rs 26,606 crore as digital revenues continue to show demand. The digital revenue for the fourth quarter grew nearly 17% YoY in constant currency and contributed 37.5% of HCLTech services revenue.

The company’s dollar revenue for the March quarter grew 10.5% annually in constant currency to $3.2 billion, but declined 1.2% sequentially, indicative of a tough business environment.

“Our pipeline is near an all-time high which reflects our differentiated business mix and strong client demand for our offerings,” C. Vijayakumar, CEO and MD, HCLTech.

HCLTech has forecast its FY24 revenue growth to be in the range of 6-8% in constant currency, somewhat better than the 4-7% guidance provided by peer Infosys. The EBIT margin guidance for FY24 stood at 18-19%.

The attrition rate for the March quarter reduced to 19.5% from 21.7% in the December quarter indicating a constrained job market across the sector. The company made a net addition of 3,674 employees during the quarter, taking the total headcount to 225,944.