Top Indian IT services companies are facing the need to rightsize their bench strength and increase utilization rates to enhance efficiency and avoid layoffs, according to experts. The bench refers to employees who are on the company’s payroll but are not actively engaged in any projects. The IT firms have seen an increase in bench size and a decline in utilization rates, with bench sizes as high as 30 percent. This situation has been attributed to inflated hiring activities over the past years, leading to underutilized bench strength. To optimize their bench, companies are adopting strategies such as delaying the joining of freshers, implementing stricter appraisals, and accelerating training and reskilling of top talent on the bench.
IT companies face a challenge in maintaining an optimum utilization rate as they need talent on the bench to quickly deploy on projects when they arise. However, these resources remain non-billable until then. The low utilization rates and large bench size may result in potential layoffs in the future. Experts suggest that companies should focus on rightsizing their bench strength by upskilling and reskilling existing employees to match current market demands. This approach allows for flexible resource deployment based on in-demand skill areas.
Despite the challenges, the Indian IT sector is expected to continue growing in 2023 due to the increased demand for cost-effective skilled talent from global giants looking to outsource their business to India. By optimizing existing resources and harnessing bench strength, companies can navigate uncertain times while maintaining agility and adaptability.
