The top Indian IT outsourcing companies have experienced a significant reduction in their bench strength within a short period. However, this may not necessarily be a negative development for these global services leaders. By leveraging higher utilization rates and generative artificial intelligence (GenAI), they are able to drive efficiencies throughout their talent hierarchy as the $254-billion industry navigates its most challenging business cycle since the global financial crisis.
In the IT industry, bench strength refers to full-time employees who are not assigned to any active projects. IT companies typically keep employees in reserve between projects and deploy them as needed based on customer demand. Fresh recruits and those undergoing training are also often ‘benched’ until they begin working on new projects.
Krishna Vij, business head at TeamLease Digital told ET, “Large IT services companies typically maintained a bench of 20-30% of their workforce. This has significantly reduced, with many companies now reporting a bench size of around 10%.” Vij attributes this change to an increased emphasis on upskilling and redeploying bench employees.

Xpheno, a recruitment firm, reports that the calibration of the bench across major IT companies has taken place since the beginning of FY25 (April 2023). The fiscal year ended with an estimated bench size of 170,000, a decrease from the peak of 212,000 recorded in JFM2023 (January, February, March last year).
Sundar Eshwar, Xpheno’s IT staffing business head, says, “As adversities sustained, margin pressures have remained high through FY2024 and this saw enterprises tightening their bench to control costs.”
Eshwar added that a 10,000 annual reduction in bench size can potentially result in a Rs 400 – 450 crore decrease in people costs alone, significantly contributing to bottom-line improvements.
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Ciel HR Services reported that over the past two years, the IT industry has reduced its bench strength by 10 percentage points, resulting in a 50-75% reduction in benches. Aditya Narayan Mishra, MD & CEO of Ciel HR Services, explained, “IT companies have been under profit pressures in the last few quarters given the global headwinds in the environment. Moreover, new technologies such as Gen AI and cloud have been disrupting every sector of the economy including IT.”
India’s IT outsourcing sector has experienced significant workforce reductions, with the top six companies cutting over 70,000 jobs in FY24. As global companies faced economic difficulties and tech demand decreased, IT services firms struggled to maintain revenue growth. This led to larger bench sizes due to reduced employee requirements on projects, affecting profitability. To remain competitive, IT giants focused on improving margins by maximizing employee productivity, reducing headcount, and efficiently allocating projects to the underutilized bench.
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“Additionally, overhiring during the pandemic contributed to the large bench pool, necessitating a shift towards leaner operations. Undoubtedly, the traditional model is transitioning towards strategic talent deployment across IT firms,” Vij added.
Major IT companies saw their utilization rates, or the percentage of employees actively engaged in projects, improve to around 80%, approaching peak levels.
Without specifying an exact figure, TCS said that it will continue to adjust its lateral hiring, emphasizing the utilization of capacity built in previous years. Infosys, a smaller competitor, reported a utilization rate of 80.7% for the full year and 82% for the fourth quarter, still below its desired level of 84-85%. Leading IT companies, including TCS, Infosys, and Wipro, are also slowing down their campus recruitment efforts.
Companies are focusing on skill-based allocation, upskilling, and leveraging the gig economy to create a flexible talent pool that includes full-time employees, gig workers, and contractors.
Ramkumar Ramamoorthy, a partner at Catalincs, a growth advisory firm, views bench size as a function of revenue growth, speed of fulfillment, and the range of services, industries, and geographies.
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“Higher the growth, higher the bench. Higher the fungibility of resources, higher the speed of fulfilment. And broader the range of services and industries, higher the bench. One of the reasons for us to see higher utilisation in recent years is because of a number of large, cost take-out deals signed by companies. In such deals, there will always be greater control and fungibility of resources with minimal client intervention.”
Although Ramamoorthy believes it is still early, AI is fundamentally transforming the way software is developed, tested, and deployed.