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In Focus: Manpower Logjam

Indian IT companies are increasingly occupying the hard disk of Fortune 500 companies. Along the way they have built world-class intellectual property. TCS retains its position as the largest software and services exporter, followed by Infosys and Wipro. But all of them are facing a common problem - talent crunch.

Indian IT companies are increasingly occupying the hard disk of Fortune 500 companies. Along the way they have built world-class intellectual property. TCS retains its position as the largest software and services exporter, followed by Infosys and Wipro. But all of them are facing a common problem - talent crunch.

TCS
TCS has operations in 34 countries, across six continents. The robust result for the first quarter was aided by depreciation of the rupee. The company's margins are under pressure owing to increasing wage bill. The company reported a 5 per cent increase in employee costs on a year-on-year basis. The Tata group company is acquiring companies abroad in view of the fact that global IT majors are increasing their presence in India. TCS has seven Fortune 10 companies as clients. The company invests around 4 per cent of its revenue on research and development.

Satyam
India's fourth largest software exporter is in a similar dilemma as its peers, that of high attrition. According to CEO Ramalinga Raju, shortage of skilled manpower is posing an increasing problem and there is concern about mounting wage costs in a fiercely competitive hiring battle. The company's attrition rate was 19.62% in the first quarter of 2006-07. Total employee base of the company stood at 27,634. The company plans to add another 10,000-12,000 employees this year. The number of customers with annualised billing of $5 million has also gone up sequentially from 46 to 51. The company plans to provide consulting service to media houses. It has over 150 clients which figure in Fortune 500 companies. The company sees revenue growth of up to 27.3% in its fiscal year ending March 31, 2007. Satyam is still making a loss in its BPO business, though losses have come down from last year.

Infosys
The technology bellwether is seeing opportunity in the imminent slowdown in the West. As companies there try to cut costs, more IT outsourcing work will flow to India. The company expects earnings to rise by a third this year. All eyes will be on Nandan Nilekani after he formally takes over the reins from iconic leader Narayan Murthy on August 21.

The company is planning to increase its staff strength by almost 50 per cent this year. This means that more than 25,000 employees will be added to its existing payroll of over 58,000 staffers. The company is looking at 82 universities across the world including the likes of Harvard, Wharton and Stanford for quality manpower. The company has invested $11 million on getting 3,500 H1B visas to enable employees work in the United States. Infosys has 469 clients including 221 with revenues of $1 million. Finacle, its banking solutions product, is getting popular with Indian and foreign banks alike.

Wipro
Wage inflation and high attrition are areas of concern for Wipro. It hired over 2,840 employees in the June quarter apart from hiking salaries by 10-15 per cent. The company has said it will continue the acquisition-led growth strategy. Since December 2005, Wipro bought companies across Austria, Portugal, Brazil, Finland and the US. Though the acquisitions were in the range of $20-$50 million, Wipro is also open to larger deals of over $100 million.