One of the world’s largest consulting firms Accenture says that subcontractor replacement will be the focus of new hirings. Accenture is looking to control the hiring and stop some promotions due to the coronavirus impact
The CEO of Accenture Julie Sweet says during an earnings call that the new hiring will focus on subcontractor replacement. Also, for some of the new joining employees, the starting dates are pushed further.
The company also looks to retain existing employees in areas like technology and cloud services. Since the beginning of March, Accenture retains around 37,000 employees on this basis.
Ms. Sweet said that the company is looking to reduce costs. As the company moves forward they will take decisions like the annual performance process. To reduce costs Accenture says Subcontractor replacement will be the focus of new hirings at Accenture
Also, the company moves the employees from strategy and consulting divisions to improve their operations and help public sector clients.
The company also announces an increase in its full-year earnings forecast. The adjusted third-quarter profit per share is $1.90. This is higher than the predicted amount by 22 analysts belonging to Bloomberg. The shares are increased by 5.9% with overall value at $213.71. This is the biggest increase since April 6
As the COVID-19 is causing problems with revenue and margins fo the firms, Indian IT firms like Infosys, Wipro, TCS, MindTree are looking to reduce their dependency on the subcontractors to control the costs. According to a statement, these companies said that the subcontractors’ cost might reduce in the upcoming months. As of now, around 10-15% of total employee costs will be the value of a subcontractor.
Over the last few years, the subcontractors’ cost has increased due to the fact that companies are preferring to look elsewhere to hire people instead of looking at the inhouse talent they have.
Mr. Milink Lakkad, the Global Head at TCS has said they are looking to reduce these subcontractors’ costs in order to keep the costs under control. He also added that they will continue to build the talent from within the organization and lateral hiring will be done in a limited manner.
Last year, 13% of employee cost is the value of subcontractors at TCS. At Wipro, it is 22%, while at Infosys it is 12%. The subcontractor’s value at MindTree is at 11% of total employee cost.
The Chief Human Resources head at Wipro has said that they are evaluating all the supply chain of employees which also includes hiring, subcontractors, bench. He also said that there are multiple contractors working with them and it is going to cost them. Hence they are looking to replace them with their own pool of employees.
Infosys CFO also addressed the same in cutting subcontractors’ cost to optimize the overall costs. MindTree is also looking to follow the same. These companies are cutting the subcontractor’s cost in multiple ways. One way is to reduce the number of contractors associated with them, other way is to ask the contractors to take rate cuts and the final way is to ask the contractors to take deferred payments.