Wipro, Infosys and Cognizant, together saw shrink in its office space by 3.7 percent. Wipro occupied 24.97 million sq ft at the end of March 2024 while Infosys saw a decline by 0.23 million sq ft in the financial year 2024. Both the companies have shut down some of their offices. Additionally, NASSCOM stated that India�s IT firms have reported weakest dollar revenue growth ever. All three multinational companies are also experiencing cutting down on employees- Infosys with 3,17,240 employees at the end of March 2024 and Cognizant with 3,47,700 employees. Wipro also saw a decline in workforce by 24,516.
The Indian multinational companies, Wipro, Infosys and Cognizant have reported a shrink in its office spaces, together making up to 103.2 million sq ft of office space in the last financial year-a drop by 3.7 percent than earlier financial year.
According to Wipro's stock exchange disclosures, the company occupied 24.97 million sq. ft. in March 2024 compared to 26.03 million sq. ft. same period last year, which is a decline of 1.06 million sq ft. The company has also shut three of its 185 sales and marketing offices, development and training centres outside India.
Additionally, Infosys, who closed down 11 offices, experienced a decline in space office by 0.23 million sq ft in the financial year 2024. The company in its annual report cited optimisation of real estate space as a reason for drop in square foot area. The former CEO of an IT service firm explained that post-COVID, most companies are adapting to a work-from-home and from-office structure. This hybrid model has enabled companies to make better use of their current physical space. He added that reduction of workforce has shifted companies focus on future office needs.
Furthermore, according to NASSCOM, India's USD 254 billion IT services has reported the weakest ever dollar revenue growth of 3.8 percent in FY24. The hiring in the sector was also low as four out of five IT companies saw reduction in their workforce except HCL Technologies, a Noida based firm who reported marginal increase of employees.
The Mint analysis of 20-F and annual report stated that Infosys workforce dropped from 3,43,234 at the end of March last year to 3,17,240 in March 2024. Wipro also experienced a decrease in workforce by 24,516 and Cognizant had 3,47,700 headcounts at the end of March 2023 after reducing 7,600 employees.
S Ravi Kumar, who took over Cognizant as CEO in January 2023, has created a policy that focuses on working with 40 percent less office space. In the post-earnings call on 3 May last year, Kumar told analysts that the structural shift in the real estate costs will help to reduce 80,000 seats and 11 million sq ft in large cities in India.
Kumar noted that this shift will also enable investment in collaboration spaces in smaller cities while creating structural savings for the future, which can be reinvested in people and growth opportunities. The program is expected to help deliver margin expansion in the range of 20-40 basis points in 2024 while supporting a large deal pipeline.
The cutting down of workforce in India's IT service firms is similar to how big technology firm such as Meta and Alphabet has vacated some of their office spaces in Dublin, London and San Francisco over the years.When India's outsourcing industry was booming in early 90s, offices plays a critical role in gaining the confidence of Fortune 500 companies. However, today these offices are being shut down to avoid office cost and focus on profitability as several services provided to the companies get commoditised.
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