IT sector's employee productivity on the rise even as firms apply brakes on hiring

With fewer workers, information-technology (IT) companies have improved their employee productivity and earnings.

- KRISHNA KANT

India's top listed IT companies reported a sharp rise in worker productivity as measured by revenue per employee in the last two years after they put brakes on fresh hiring and rationalised their staff base.

The country's 10 biggest listed IT companies that are part of the Nifty IT index had net sales of an average of ₹42.3 lakh per employee in FY24, up 9.2 per cent year-on-year (Y-o-Y) from ₹38.7 lakh in FY23 and a four-year low of ₹34.9 lakh in FY22.

This grew further to ₹43.3 lakh per employee in H1FY25 on an annualised basis.

"Nearly 90 per cent of the rise in revenue per employee in the past 12-18 months came from a headcount decline and the rest from new deals in Gen AI and the IT transformation segment," said Gaurav Vasu, founder and chief executive officer, UnearthInsight, a research and cognitive intelligence platform for the tech sector.

In contrast, the industry had reported a Y-o-Y decline in revenue per employee for two consecutive years in FY21 and FY22 due to a mismatch between revenue growth and an expansion in their employee base.