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IT companies struggle to protect margins amid concerns of worsening attrition

IT companies are struggling to protect margins due to elevated employee costs in order to tackle worsening attrition in the sector

By | CNBCTV18.com | www.cnbctv18.com

Following Tata Consultancy Services’ (TCS) opening of the corporate earnings season last week, HCL Technologies is scheduled to release its financial results for the April to June quarter on Tuesday.
IT companies are struggling to protect margins due to elevated employee costs in order to tackle worsening attrition in the sector. Analysts expect the trend in IT margins to continue going forward, despite robust demand for technology across other sectors.
Companies such as TCS reported a deterioration in attrition rate in the IT services division, rising to 19.7 percent from 17.4 percent in the previous three months. The company’s employment surpassed the 6 lakh-mark during the quarter with the addition of 14,136 workers.
By comparing the anticipated HCL Tech profits with the TCS numbers from Friday, it is possible to gain an overall understanding of the effect this has had on the IT sector.
Net profit
Tata Consultancy Services (TCS) on July 8 reported a net profit of Rs 9,478 crore for the April to June quarter, falling short of Street expectations. Since staff expenditures and high attrition continued to eat into the company’s margin despite robust demand, the net profit decreased by 4.5 percent when compared to the prior quarter.
Source
www.cnbctv18.com
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