Changing skill demands: Era of big bench strength at IT firms may be over

Indian information technology (IT) services players may not need to keep a big bench strength going forward, as they adapt to rapidly evolving skill demands, particularly in artificial intelligence (AI). While firms continue to keep bench sizes lean amid muted demand, industry leaders say even a future uptick may not justify a return to the old model. 

Companies such as Infosys, Wipro, Cognizant, and Tech Mahindra have maintained their IT utilisation rates at around 85 per cent over the past couple of years, a contrast to a decade ago when the figure hovered around the mid-70s. Utilisation is billable employees versus those in administrative tasks. 

This reflects that firms are deploying nearly all their available resources on projects, keeping a minimal bench to maintain billability, particularly as growth has remained tepid in recent years. A large bench would automatically dent a company’s margins.  Neeti Sharma, chief executive officer of TeamLease Digital, said the average bench time has declined in the past few years to 45 days from 90 days earlier, as companies are unwilling to maintain a bench with legacy skill sets. “Keeping a bench increases cost, and most companies are figuring out what their employees need to be trained in AI. If you keep a bench, the skills may not remain relevant,” Sharma said.

 

“I do not see that level going up even if demand comes back because companies will not need manpower in linear fashion as more people get trained in agentic and Gen AI,” Neeti Sharma of TeamLease Digital said. 

Another factor is the slowdown in growth. The heyday of double-digit expansion is over. For FY25, industry body Nasscom pegged growth at 5.1 per cent. According to Nasscom’s CEO survey, spending in FY26 is expected to be similar to FY25. Also, global uncertainty continues to rise. 

Ramkumar Ramamoorthy, partner at Catalincs, a tech growth advisory firm, believes if the demand environment remains unchanged, utilisation rates will continue to stay high. 

“Utilisation is a function of growth and profile of growth. It is high for most companies because organic revenue growth has plummeted to low single digits for three years in a row. A significant portion of the growth is happening through cost rationalisation and vendor consolidation programmes, rather than discretionary, digital transformation initiatives,” said Ramamoorthy. 

With discretionary spending under pressure, cost rationalisation programmes or run-the-business work have been the nature of deals. While these deals can be large in value and span three to five years, they are also witnessing productivity gains of 30-40 per cent due to AI integration. 

“When you win such deals, you have about six months to ramp up the workforce and deploy them. So why do you need a bench?” said an analyst from an international research firm. 

Benches are mainly required for shorter discretionary projects (those lasting less than a year), but such projects have declined, with limited visibility due to ongoing macroeconomic uncertainties. 

IT service providers have also realised that relying solely on a big workforce is not the elixir for them to win transformative deals. The focus is more on reskilling in new-age technologies and improving efficiency and productivity with existing employees, especially doing more with less. 

Hansa Iyengar, practice leader of BFS and IT services at HfS Research, said that bench strength has been declining for some years now as resources are now being used constantly. “Gone are the days when companies used to hire tens of thousands of freshers. The reliance on human-led services is reducing significantly and with AI automating jobs at so many levels, it will only go down further. In the future, bench strength will literally be zero,” she said. 

"As utilization levels plateau near their peak, the question isn't whether the bench is too thin but whether our systems are intelligent enough to forecast and adapt in real time. The era of static workforce planning is over. Today, talent strategy hinges on dynamic capability mapping, continuous upskilling, and proactive succession thinking. A lean bench is sustainable only if backed by deep visibility into project demand signals and the ability to redeploy talent swiftly," said Krupa NS, chief human resources officer at Xoriant.