TCS, Infosys, HCLTech to reduce bench strength by 8-10%. Here's what's changing

Top IT services companies are moving towards leaner bench strength as AI and demand-led hiring reshape staffing. The shift points to tighter deployment, more reskilling and a sharper focus on specialised talent.

In Short

• Top IT firms to reduce bench strength to 8-10% by FY27
• AI and demand-led hiring focus shrinking standby workforce
• Companies prioritising utilisation and upskilling over layoffs

India's top information technology (IT) companies are expected to operate with much leaner "bench strength" in the coming years as artificial intelligence (AI), better workforce planning and demand-led hiring reshape the industry's traditional employment model.

The average bench strength across leading IT services companies, including Tata Consultancy Services (TCS), Infosys, HCLTech, Wipro and Tech Mahindra, has already fallen to late single digits, or at most 12%, over the past three years.

It is expected to decline further to around 8-10% in FY27, reported Moneycontrol. The report, citing staffing firm TeamLease Digital, said this is a sharp drop from the pre-AI era, when companies typically maintained bench strength of around 20-30%.

In the IT services industry, "bench" refers to employees who remain on a company's payroll but are not deployed on active client projects. Traditionally, firms maintained a sizeable bench so they could quickly assign engineers whenever new client projects came in.

WHY IS BENCH STRENGTH SHRINKING?

IT companies are no longer hiring large numbers of employees in anticipation of future demand. Instead, recruitment has become far more demand-driven, with companies focusing on specialised skills in artificial intelligence, cloud computing, cybersecurity and data analytics, as per the report.

"The bench has become a lot leaner over the last three years than what it used to be. Hiring has become far more demand-led and focused on niche skills. Companies are using AI, better workforce planning and stronger demand forecasting to improve utilization instead of maintaining large standby teams," Neeti Sharma, CEO of TeamLease Digital, told Moneycontrol.

The report added that bench timelines have also reduced, with employees now typically remaining on the bench for around 30-45 days compared to 45-60 days earlier.

COMPANIES ARE PRIORITISING UTILISATION

Another reason for the shrinking bench is the industry's focus on improving employee utilisation amid slower revenue growth and AI-led productivity gains.

Sumit Pokharna, Vice President – Fundamental Research at Kotak Neo, told Moneycontrol that companies are increasingly looking for a "relevant" workforce that is AI-skilled and can be deployed quickly.

"Currently, utilisation rates for IT firms are very high. Controlling and maintaining a tight workforce is the only way for companies to deal with the topline and revenue challenges amid AI deflationary pressures. Otherwise, it could become a margin issue," he said.

DOES THIS MEAN MORE LAYOFFS?

Not necessarily.

The report says companies are currently focusing more on reskilling existing employees than reducing headcount.

According to Neeti Sharma, companies are investing in upskilling and reskilling programmes to redeploy employees into newer technology projects.

"Companies are making investments in upskilling and reskilling their workforce to redeploy them in newer projects. However, in cases where this redeployment is not possible, companies have no choice but to churn out excess capacity. This is less about reducing headcount and more about reshaping the workforce," she said.

Francis Padamadan, CEO of specialist staffing firm Xpheno, told Moneycontrol that IT firms have already shed much of the excess capacity created during the post-pandemic hiring boom.

"IT service firms have gone through cycles of offloading excess capacity since the post-pandemic buoyant hiring phase. There hence isn't much of a flab to shed at this point or churn out excess capacity, unless the AI investments pay back in the near term and replace more seats," he said.

HIRING IS CONTINUING, BUT THE FOCUS HAS CHANGED

Despite operating with leaner benches, hiring is not coming to a halt.

According to the report, most major IT companies have indicated they will continue or resume hiring, though with a stronger focus on specialised talent.

TCS is investing in experiential and project-based learning to improve deployment readiness while moving towards a more skills-centric workforce. Infosys plans to hire around 6,000 frontier engineers over the coming years.

HCLTech is sharpening its hiring strategy by focusing on a select group of specialised freshers who are expected to evolve into frontier deployed engineers over the next two to three years.

Tech Mahindra, which skipped campus hiring last year, has also indicated that it will restart fresher hiring as business visibility improves. Wipro is the only major IT company that has not announced similar hiring plans, according to the report.

The findings suggest that India's IT industry is moving away from the long-standing practice of maintaining large standby workforces.

Instead of hiring in bulk and keeping engineers on the bench until projects arrive, companies are increasingly relying on AI-enabled workforce planning, demand forecasting and continuous upskilling to keep employees deployed.

For job seekers, the shift means employers are placing greater emphasis on specialised, industry-relevant skills and deployment readiness rather than maintaining large pools of employees waiting for future projects.

- Ends