In the aftermath of the COVID-19 pandemic, three of India’s largest IT outsourcing companies—Tata Consultancy Services (TCS), Infosys, and HCL Technologies (HCLTech)—have recorded a notable increase in revenue per employee. This shift signals a changing paradigm in how Indian IT services are aligning operations with global economic shifts, automation advancements, and new revenue streams like software license sales.
Surging Revenue Efficiency Amid Global Turbulence
Despite macroeconomic uncertainties and cautious tech spending from Fortune 500 companies, TCS, Infosys, and HCLTech have all posted gains in revenue generated per employee for FY25:
- TCS: $49,902 per employee, up 4.91% from FY22
- Infosys: $60,164, up 5.79%
- HCLTech: $61,388, up 1.02%
These increases stand in contrast to Wipro and Tech Mahindra, which experienced declines in this metric. Wipro saw a drop from $46,983 to $45,118, while Tech Mahindra slid from $44,065 to $42,585.
Infosys led in gains, with each employee contributing $3,295 more than in FY22, while HCLTech saw a more modest gain of $618 per employee.
Hiring Cools as Automation Heats Up
A significant driver behind this trend is a sharp slowdown in hiring. The five major Indian IT firms—TCS, Infosys, HCLTech, Wipro, and Tech Mahindra—collectively shed 57,891 employees over the past two years. This marks a stark turnaround from FY23, when they collectively added 358,932 new workers—more than the total headcount of Infosys alone.
The cooling demand stems from global headwinds, including trade tensions, geopolitical strife, and cautious enterprise tech budgets. Hiring freezes and attrition have enabled companies to extract more value per employee, avoiding backfilling junior positions and relying more on the existing workforce.
As Kshitij Saraj of Tusk Investments put it, “Hiring has been slow in the last two years, which has caused the revenue per employee to increase… Many lower-level roles are simply not being replaced.”
The AI Dividend: Productivity Without Payroll Expansion
Generative AI and automation are playing an increasingly central role in boosting employee output. Companies are now relying on AI tools to enhance productivity, automate low-level tasks, and improve turnaround times. This allows each engineer to handle more work and manage more clients without expanding teams.
A Mumbai-based analyst confirmed: “AI tools are being widely used by IT outsourcers for their clients, which is leading to each employee getting more work and handling more clients.”
Software Sales: A Headcount-Free Revenue Stream
In addition to automation, third-party software sales have emerged as a lucrative revenue source. While exact contributions remain undisclosed for most firms, analysts estimate this stream accounts for around 7% of total revenue. HCLTech is a standout, openly reporting that software products—including license revenue—contribute about 10% of its full-year revenue.
Selling licenses or third-party tools doesn’t require expanding the workforce, thus boosting overall revenue without compromising efficiency metrics.
Abhishek Kumar of JM Financial explained, “Higher share of third party items for sale could also be contributing to improved revenue per employee.”
Wider Implications: Fewer Jobs, Static Salaries
While efficient from a business standpoint, this trend spells trouble for new engineering graduates. The subdued hiring environment, paired with unchanged entry-level salary packages, limits employment opportunities for freshers and could push many to seek jobs in alternative industries or smaller firms.
For FY25, here’s how the revenue numbers stack up:
- TCS: $30.18 billion (up ~4.3%)
- Infosys: $19.28 billion (up ~4%)
- HCLTech: $13.84 billion (up ~3.8%)
- Wipro: $10.51 billion (second year of decline)
- Tech Mahindra: $6.26 billion (second year of decline)
Conclusion: Leaner, Smarter, and Software-Driven
The post-pandemic IT landscape in India is being redefined by a leaner approach to growth. The trio of TCS, Infosys, and HCLTech exemplifies how productivity gains, automation, and license-driven revenue are reshaping outsourcing economics. Yet, for job seekers and junior professionals, the message is clear: the days of mass hiring booms are behind us—for now.
As global clients continue tightening their tech budgets, India’s IT behemoths are betting on smarter tools and sharper talent to keep margins strong without growing their payrolls.
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Disclaimer
This article should not be interpreted as investment advice. For any investment decisions, consult a reputable financial advisor. The author and publisher are not responsible for any losses incurred by investors or traders based on the information provided.