India’s information technology services companies are reviewing their bench policies and letting go of staff not deployed on projects for over two months to cut wage costs amid slowing client spending, reports Livemint, citing several IT companies. A bench at a software services provider refers to employees who are not deployed on a project. This group, including new hires, must sit for client interviews to get selected for assignments. According to employees at the IT companies, HCL Technologies Ltd has cut down on the time employees can spend on the bench without getting on a project.

While Cognizant Technology Solutions Corp. assists benched employees in obtaining a project, it asks those unsuccessful to leave. For some firms, that has bumped up the utilisation rate-or the percentage of employees currently working actively. Reducing the bench size is another indicator of a jobs slowdown at India’s tech sector, which has cooled from the pandemic-driven frenzy for talent that inflated wage bills. Lower demand for IT services from Fortune 500 clients caused the USD 254-billion Indian software services industry to grow at its slowest rise of 3.8% in the year ended March. The sentiment hasn’t improved yet.

“We still see situations where clients are ramping down programmes or re-evaluating programmes at very short notice,” K. Krithivasan, chief executive officer of Tata Consultancy Services, said in the first-quarter earnings call on 11 July. His peer Srinivas Pallia, CEO and managing director at Bengaluru-based Wipro, also speaking in an earnings call, said, “We did not see a significant shift in the demand environment. Clients remain cautious and our discretionary spending continues to be muted.”

IT services companies usually let employees sit on the bench for up to 120 days or four months. This period has fallen to about two months, said a Tech Mahindra staffer on the condition of anonymity. If employees are unable to get a project within that period, they are being asked by HR to leave, this person said.

With fewer employees on the bench, utilisation rates are improving. Infosys, Wipro, and LTIMindtree Ltd reported a sequential increase in the percentage of staff deployed on projects-between 83% and 85%. But Tech Mahindra Ltd reported a decline to 86%. Leaner benches will further hit employment in the IT sector.

“While cost-saving is a key factor, the move is also about ensuring that employees are continuously engaged, upskilled, and contributing to the company’s objectives,” said Krishna Vij, vice-president of IT staffing at TeamLease. “It is less about removing those who are not trying to work and more about optimizing talent deployment to meet evolving market demands effectively.”