Average Bench Time Drops By 50% At Top IT Firms In India – Trak.in

Past years have witnessed several top Indian IT services companies, including Tata Consultancy Services (TCS), Infosys, Wipro, HCLTech, and Accenture, among others reducing bench sizes.

Uncertain Times Calls For Tough Measures 

While most of them reduced their team size this year, the rest are in a bid to defend margins and improve utilisation rates as revenue growth remains slow.

This has not only affected bench sizes, even the bench holding timelines have plunged significantly, said the staffing firms and industry experts.

Here referred benching in the IT services industry refers to the employees on payroll who haven’t been deployed on any active projects so far. 

They are meant to be kept as a backup in case a sudden client demand arises.

So far the average bench time has come down to 35-45 days compared to an average of 45-60 days in FY20 and FY21, when the sector’s revenue growth was in the higher double digits, as per the data sourced from market intelligence firm UnearthInsight.

They are expecting this trend to continue in FY26 too.

Employees At A Risk Of Bench Layoffs 

Here it is noteworthy that employees with nine to 14 years of experience across legacy skills too are at the risk of bench layoffs.

On the other hand, niche skills related to artificial intelligence, machine learning and cloud are more in demand.

There is a considerable reduction in bench time as the benched employees which accounted for 10-15% of the average overall headcount mix of the IT companies have now come down to just 2-5%, as per the data from staffing firm TeamLease Digital.

According to the co-founder of a specialized staffing firm, Xpheno, Kamal Karanth, high bench volumes in calendar year 2022 and early 2023 were an outcome of the hyper-hiring in 2021 and early 2022, resulting in lower utilization rates.

Further adding, “The resizing and rebalancing of headcounts since 2023, amidst revenue and margin pressures hit the bench volumes first to move the utilisation rates up again. Enterprises have since gone for a mix of staffing consumption for just-in-time workforce and subcon arrangements for longer tenures.” 

“From 70-75% utilisation, companies have started reaching 80-85% utilisation rates. The attrition has also reduced to 11-13% from 28-30%, When you are not losing people you will not be utilising the benched resources. With GCCs hiring directly from the talent pool, IT firms have started facing increased competition. So they started opting for leaner and project specific hiring models,” said Krishna Vij, business head-IT staffing at TeamLease Digital.

When it comes to the current utilisation rates it stayed in the optimal mid to late 80 percent range for IT firms.

At the same time the estimated bench sizes have shrunk by 15 percent compared to the size a year ago. 

The estimated bench size reduction is nearly 22 percent, on a 2-year basis, as per the data from Xpheno.

In order to have a faster or immediate deployment, the Tier-I firms such as TCS do maintain a slightly higher lateral bench to respond to their clients.

Considering the slow down, deal closures are getting delayed, IT services firms have to optimise costs, said founder and CEO, UnearthInsight,.

“Around 2-3 months is the current bench policy for laterals but Tier I firms like TCS, Infosys, Wipro, HCL, Accenture are looking at faster deployment to projects from bench hence bench optimization is a normal activity specially for skills not in demand or skills where demand visibility is weak,” Gaurav Vasu added.

It appears to have reflected negatively on the quarterly headcount addition of most of the top five Indian IT companies.

Besides this the overall sector has started hiring more as compared to the previous fiscal seeing some green shoots in the demand environment.

Vasu said, the bench layoff trends are also an implication of the location of the delivery centres, not just demand cycles and AI disruption.

Further adding that managing a bench in smaller cities both globally and in India has been difficult as niche skills-focused projects don’t see many takers for the tier II cities often.

According to Vasu, “IT companies try to take fungible skills or vanilla skills to Tier-II cities, global low cost cities as both time and cost of bench could directly impact EBIT negatively. Currently 0% to 0.25% of the headcount of a Tier-II city based campus or delivery centre will be on bench across vanilla (legacy skills) and niche skills.” 

It appears that certain IT majors especially Tier-I firms don’t want to keep any bench, said another staffing firm business lead seeking anonymity.

Adding, they are even passing the bench pressure to the staffing firms.

Adding, “They don’t have to invest on the bench, but staffing firms have to bear the costs to retain the engagement with the client IT firm. Depending on how the projects come, staffing firms will then deploy the candidates. Until then, the benched candidates will be on staffing firms’ payrolls. That’s one way of doing it.”