An article published in the Times of India in May 2022 pointed out that subcontractor expenses had substantially increased for the four largest Indian IT firms, TCS, Infosys and HCL and Wipro. From around Rs. 30,000 crores in 2018, costs under this head ballooned to over Rs. 50,000 crores, a 70% increase in 4 years, much higher than the other major cost heads.
As usual, numbers reveal a lot, but often hide the most important parts.
What do these numbers hide?
That from 2020 onwards the world was in the vice-like grip of the Covid-19 pandemic that brought life as we knew it to a screeching halt and sent all corporations, large and small, looking for answers to the situation to enable them to stay afloat.
That the lockdowns and shelter in place requirements clamped down by governments around the world led to many companies searching for digital solutions to stay alive. This acted as a fillip to the demand for digitisation and software development.
That the Great Attrition was triggered which led to a large number of software employees evaluating their work-life balance and taking unprecedented steps like leaving their job without another one already in hand.
That with work from home becoming an accepted norm, while many left their jobs, a larger number got engaged as freelancers and consultants who, without being employees of the company they were working for, were able to contribute to the efforts of that company as subcontractors.
How did these subcontractors help?
Subcontractor costs may have gone up as revealed by the article, but in doing so they enabled these companies to collect much more as revenue from the contracts they helped in delivering on.
They also helped these companies bridge the manpower gap created by the departure of a part of their workforce.
Over and above bridging the manpower gap, they enabled these IT leaders and many others to cater to the increased demand for digitisation.
Who is a subcontractor?
The same article defines it as “those hired by IT firms through staffing agencies. It’s a contract-to-hire service where staffing firms vet prospective contractors, process their payroll, offer insurance coverage, and other benefits. The staffing agencies also provide performance guarantees.”
It quotes an industry leader as saying, “subcontractors are used to bridge skill gaps, meet unusually high demand or strengthen rapidly-depleting talent bench.”
IT staffing is a friend for IT companies
This defines the business model of IT staffing companies such as Ushankk to a T. IT staffing is one of the unsung heroes of the pandemic. Seen and heard but rarely acknowledged. They have continued to serve the major, and not-so-major IT companies during the most difficult conditions, come rain or shine, hell or high water. They have continued to enhance their skills to keep pace with client requirements.
As work from home gains greater acceptance and as employees start factoring in a work-life balance, staffing solutions providers such as Ushankk will have a major role to play in the days to come.