Weak business driving TCS, Infosys and Cognizant to cut travel costs by 50%

A recent American Express survey found that one of the factors hindering a complete recovery of business travel post-Covid is the increasing prevalence of virtual meetings and events

India’s major IT service providers have significantly reduced their travel expenditures, by nearly 50 per cent since 2020, driven by subdued demand, efforts to optimise costs, and increasingly restrictive US visa policies, as reported by The Economic Times.

Travel expenditures in the software services sector include costs associated with on-site travel for sales and executive meetings, including accommodation, transportation, and visa-related expenses.

Leading software service exporters, including Tata Consultancy Services (TCS) and Cognizant, experienced a significant drop in travel-related expenses, which, as a percentage of their revenue, fell to 1.2 per cent and 2.2 per cent respectively in 2023-24, compared to 2.1 per cent and 4 per cent in 2019-20. 

Infosys reduced its travel costs to 1.3 per cent from 3 per cent over the same period. Meanwhile, HCL Tech and Wipro saw their travel expenditures as a percentage of revenue shrink to 1.1 per cent and 1.7 per cent in 2023-24 from 2.5 per cent and 2.9 per cent, respectively, according to data from recruitment firm Teamlease Digital Services.

The report cited a Wipro spokesperson saying the pandemic in 2020 had nearly stopped business travel, which resulted in the widespread adoption of virtual interactive tools that continue to be used even after the pandemic.

A recent survey by American Express showed that one of the factors hindering a complete recovery of business travel is the increasing prevalence of virtual meetings and events. Additionally, 43 per cent of financial decision-makers surveyed pointed to the use of advanced software for managing expenses and travel as a significant innovation.

IT companies’ firing woes

In the meantime, the trend of layoffs in the technology sector continued through July 2024, with over 8,000 jobs lost across 34 tech companies. This has brought the total number of layoffs for the year to 124,517 from 384 companies globally.

Intel recently announced plans to cut over 15,000 jobs, representing more than 15 per cent of its workforce, as part of a $10 billion cost-reduction initiative targeting 2025. CEO Pat Gelsinger attributed these layoffs to disappointing revenue growth and challenges in capitalising on AI trends.

In June, Microsoft trimmed approximately 1,000 jobs within its mixed reality and Azure ‘moonshots’ divisions. Additionally, UKG, a Massachusetts-based software company, disclosed significant layoffs this month, reducing its workforce by 14 per cent, which translates to about 2,200 employees. Meanwhile, Intuit Inc., a California-based financial management software firm, has announced plans to cut 1,800 positions, accounting for roughly 10 per cent of its workforce.