Indian IT firms use AI to drive sales growth with fewer new hires

Indian IT outsourcing companies, which employ millions, are tapping artificial intelligence to boost efficiency and reduce the need for more workers to grow their business.

HCL Technologies Ltd. and LTIMindtree Ltd. are among companies saying they need fewer new staff to keep revenue increasing. The firms, which make their profits from non-core business processes and IT outsourcing projects from corporations in the US and Europe, have integrated AI tools and are already reaping the benefits of greater efficiency.

HCL grew its service revenue 4.8 per cent in the fiscal year through March even as it reduced headcount by 1.8 per cent. “That’s the non-linearity that we want to build on an ongoing basis,” Chief Executive Officer C Vijayakumar told analysts on a call this week.

Smaller peer LTIMindtree reduced headcount by 2.9 per cent in the first three months of the year from the previous quarter. Chief Operating Officer Nachiket Deshpande told analysts that staff growth may not be linear with revenue growth, citing AI-led productivity improvements.

For India’s IT giants, employee salaries constitute their biggest expense, and hiring plans have long been seen as an indicator of good times ahead for the firms. India’s IT sector has boomed over the past two decades, making the industry one of the biggest job creators in the world’s most populous country.

To be sure, many companies still say they will boost recruiting. Infosys Ltd. expects to add 20,000 entry-level employees this financial year, more than the 15,000 it hired last year. Tata Consultancy Services Ltd. didn’t commit to a number, but said it plans to hire more from college campuses this year despite a challenging economic environment.

HCL may gain more efficiencies from AI than some larger software-focused rivals, as it gets a bigger share of its revenue from product engineering and IT infrastructure management. AI is boosting efficiency at digital process operations by as much as 50 per cent and as much as 25 per cent at software development, Vijayakumar said.

HCL also said its AI offerings were helping it gain a larger share of its clients’ IT budgets. “There was incremental business from almost all the renewals that we signed,” Vijayakumar said. It expects annual revenue to grow 2 per cent to 5 per cent, the highest forecast amid peers.