Indian IT firms reduce bench time amid slow revenue growth

India’s top IT services firms have significantly reduced bench sizes and benching periods over the past year and a half to maintain margins and improve workforce utilization amid slowing revenue growth.

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Benching refers to IT employees on payroll who are not currently assigned to any active projects but are retained as a backup for sudden client demands. However, with companies focusing on cost optimization, both the percentage of benched employees and the duration they remain on the bench have decreased.

Market data indicates that the average bench time has now dropped to 35-45 days from 45-60 days in previous financial years when revenue growth was stronger. This shift is expected to persist in the coming years as companies continue to streamline operations.

Employees with nine to 14 years of experience in legacy technologies are at higher risk of layoffs due to the growing demand for niche skills in artificial intelligence, machine learning, and cloud computing. Previously, benched employees accounted for 10-15% of IT firms' total workforce, but this figure has now fallen to just 2-5%.

The reduction in bench volumes follows the hyper-hiring phase of 2021 and early 2022, which led to lower utilization rates. With a continued focus on workforce efficiency, the trend of reduced bench time is likely to continue in the near future.