Articles by Shristi Achar

Technology

IT companies log productivity win in Q2 with better revenue per employee

India's top information technology companies posted mixed performance on revenue per employee (RPE) for the second quarter, even as a few smaller firms outperformed the sector leaders on the productivity metric.HCLTech led the pack among the top-tier firms, posting a 2% increase in RPE to more than $16,000 (₹14.17 lakh) in the quarter ended September 30 when its headcount grew 3.7%, according to market intelligence firm UnearthInsight Research. Market leader Tata Consultancy Services (0.5%) and Tech Mahindra (1%) also posted improvements, with both reporting a decline in headcount.Infosys and Wipro, however, posted a fall in RPE by 0.7% and 4.7%, respectively. While TCS' RPE increase is attributed to the workforce restructuring, Tech Mahindra's focus on workforce optimisation and project mix improvement aided gains, the report said. For HCLTech, artificial intelligence-led productivity gains, better workforce productivity and project execution efficiency led the RPE growth. Infosys recorded growth in headcount, indicating future AI-driven hiring and investments for its deal pipeline, the report said. Wipro's marginal headcount addition and drop in RPE indicated weak billability, it added. ETtech Mid-tier IT companies like Persistent Systems and Mphasis outperformed tier-I companies in this metric indicating productivity. Persistent posted a 4.2% gain in revenue per employee, while Mphasis saw an 8.4% increase. With smaller-scale projects to deal with and greater cost optimisation, mid-tier companies have been de-linking headcount and revenue growth, aiding better billables per head, ET reported earlier this month.Despite the larger scale, HCLTech still clocks decent growth in the metric, analysts said. "At least 30-40% of the RPE growth (at HCLTech) is coming in largely on the back of AI-led transformation and AI-led productivity," said Gaurav Vasu, cofounder of UnearthInsight. Hiring skilled AI-first or data lake engineers at a premium is also helping the numbers, he said."However, the services mix and the geography mix also have a very big impact on the revenue per employee," Vasu said. TCS generates about 10% of its revenue from the Indian market...Whereas in HCLTech, comparatively, it's less than 2-3%. The India business RPE is much lower compared to North America or others."The service mix also includes diversified streams of software business and the engineering R&D verticals, said Yugal Joshi, partner at US-based IT consultancy Everest Group. "The software business is very light on FTE, very high on revenue, especially since after they (HCLTech) did the acquisition of IBM's software business," he added. HCLTech had in 2019 acquired certain security, marketing, commerce and digital solutions from IBM.