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How are Indian IT Companies Reducing Workforce Expenses?

Manish Gupta - Chief Growth Officer at Taggd
By Taggd Editorial Team

June 15, 2023


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Recent times have been challenging for Indian IT companies. As of May 2023, there was a 23% YoY decline in IT hiring across India largely due to the global economic slowdown.

Amidst rising focus to improve profitability, it comes as no surprise that IT companies hiring in the current market are on the lookout for ways to optimize costs and enhance operational efficiency.

This blog explores how Indian IT companies are approaching and reducing workforce expenses, shedding light on their hiring practices, industry trends, and cost optimization techniques.

1. Welcoming Automation and AI

Indian IT companies have embraced automation and artificial intelligence (AI) technologies with keen interest from the IT majors for generative AI too. By automating repetitive tasks and implementing AI-driven solutions, companies streamline operations, enhance productivity, and reduce reliance on manual labor.

While there is usually a negative perception whenever ‘AI’ and ‘jobs’ are mentioned in the same context, Santhosh Nair, Director and COO of CIEL HR, believes that the integration of AI is a very economic move for companies in general.

This notion is complemented by the fact that notable tasks such as data entry, testing, and monitoring systems can now be automated, freeing up resources and reducing the overall workforce requirements.

2. Rationalizing Workforce Structure

To optimize workforce expenses, Indian IT companies are focusing more on efficiently conducting periodic assessments to identify areas of redundancy and inefficiency. Through a process of workforce rationalization, companies are actively restructuring teams, eliminating duplicate roles, and optimizing employee utilization. By aligning the workforce with business needs, companies are aiming to streamline operations and reducing unnecessary expenses associated with excess staffing.

What exactly does this entail?

Well, rationalization efforts involve evaluating project requirements, analyzing skill sets, and identifying areas where roles can be consolidated or eliminated. For instance, a company may merge similar teams working on different projects or reassign employees to different departments based on their skill sets and project demands, increasing synergies while reducing the excess staff.

3. Skill Shift in Workforce

Given the rapid pace of disruption in digital technologies, the need for employees with emerging skill sets is constantly rising. It also means that existing skill sets are getting redundant. Skill shift in the workforce occurs when IT companies prioritize the reduction of workforce expenses. To achieve this goal, companies may focus on upskilling and reskilling their existing employees to fill different roles within the organization.

By adapting the workforce to meet evolving demands, companies can optimize efficiency and cost-effectiveness while retaining valuable talent and minimizing the need for extensive hiring or layoffs. Yeshab Giri, CCO of Randstad Technologies, stresses on this elaborately amidst job layoffs by Indian IT giants.

4. Variable Pay Structures + Gig Workers

To align employee performance with compensation, companies are increasingly looking forward to implementing variable pay structures. A portion of an employee’s compensation is tied to their performance or project outcomes.

By linking pay to measurable results, companies incentivize employees to deliver high-quality work and foster a performance-driven culture. This approach ensures that workforce expenses align with business performance, optimizing costs. Variable pay structures can take different forms, such as performance bonuses, profit-sharing plans, or stock options.

Moreover, the increasing gig economy is steadily attracting skilled talent, and IT companies hiring in India are leveraging it to their advantage by employing contractual staff, whose compensation is generally less onerous for companies. All IT majors- be it TCS or Wipro, are hiring gig talent, and according to an article by PeopleMatters, every third IT worker will soon be a gig employee.

5. Remote and Flexible Working Arrangements

There has been a significant rise in remote and flexible working arrangements in the Indian IT industry. By allowing employees to work remotely or adopting a hybrid work model, companies reduce infrastructure costs extensively in the following ways:

Reduced office space costs: When employees work remotely, companies don’t need to provide office space for them. This can lead to an appreciable amount of monetary savings for a company.

Reduced travel costs: When employees don’t have to commute to work, they can also save the company an appreciable amount of money. This is due to the fact that the company need not provide parking or transportation subsidies.

Reduced employee benefits costs: Companies may be able to reduce their employee benefits costs when employees work remotely. This is because the company does not need to arrange for services like pantry or other secondary employee perks when employees are working from home.

It goes without saying that hiring across the IT industry in the current scenario can get chaotic and frustrating. So it is important to leverage your hiring efforts seamlessly in order to yield the best ROI on your hiring expenditure.

Taggd, a leading AI-powered digital hiring platform, has extensive experience in recruiting niche talent across IT and several other industries. With the right blend of expertise and experience, you can leave all your hiring requirements with us and rest assured that we will deliver.

Get in touch with us today to find ready-to-hire candidates for IT hiring India!

By Manish Gupta

Chief Growth Officer