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IT firms’ new cost cutting mantra

Posted by jimstech on March 19, 2010

As IT firms automate their commoditized service offerings, they do not necessarily need engineers to perform all tasks. Instead, they are increasingly hiring non-engineering graduates for testing software applications and managing computer infrastructure of their clients in order to do more with fewer staff and at lower wages than computer engineers, reports Pankaj Mishra of Economic Times.

From nearly 10 percent of their current workforce, non-engineering graduates could account for nearly 20-25 percent of the staff at companies such as TCS, Wipro and HCL, over the next one to two years. Cognizant already has almost 20 percent of its global workforce who are non-engineering graduates. Companies such as Wipro are already readying their strategies for shifting nearly 40 percent of software services to readymade templates that can serve additional customers without having to hire incremental staff.

For years, India’s $50-billion software exports industry has been hiring thousands of engineering graduates every year for writing software codes and processing back office tasks for top customers such as General Electric, Citibank and JP Morgan Chase. However, increasing wage inflation and rising attrition has forced them to seek ways to arrest linear growth.

Today, most of the entry-level computer science graduates are paid anywhere between Rs. 2 lakh and Rs. 5 lakh per annum by these software companies when they join, and with wage inflation of around 10 percent every year, the salary costs keep going up.

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