Subcontractors face the axe as IT rejigs costs

BENGALURU | MUMBAI: Indian IT services companies may reduce dependence on subcontractors to control costs, as the Covid-19 pandemic threatens to slow new deal flow and pressure margins.

Tata Consultancy Services (TCS), Infosys, Wipro and Mindtree said subcontracting costs are expected to fall in the coming months. On average, subcontracting forms about 10-15% of total employee cost.

In the last few years, subcontracting costs had spiked as IT firms looked beyond in-house talent for new-age technical skills. “We will be reducing dependency on contractors to some extent to optimise it (cost). Lateral hiring will be done for specific skills in a limited manner and we also continue to build talent within the organisation,” Milind Lakkad, Global Head, Human Resources at TCS, told ET.