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Persistent Systems streamlines campus hiring strategy

Mid-tier IT services company Persistent Systems aims to visit fewer campuses for hiring freshers, a senior official said on Monday.

Over the next three years, the company is also targeting to expand its operating profit margin by about 3 percentage points above the levels of about 14.5-15 per cent it aims to exit FY23, its chief financial officer Sunil Sapre told PTI.

Speaking two days after the Pune-based company announced its December quarter earnings, Sapre said it is already carrying candidates who have been trained for 18 months in some cases and are yet to be deployed on projects, which is making it circumspect about fresher hiring in the new year.

“We will be there at campuses, but we will do it (hire) more judiciously,” Sapre said.

When asked if he meant that the company will visit fewer campuses when he says judiciously, Sapre replied in the affirmative.

He said that for the company, which added about 500 people to take its overall strength to 23,336, all the hiring is done keeping in mind the aim to keep the utilisation at over 83 per cent, which can help it deliver the required margins.

For the December quarter, its overall utilisation went up to 81.5 per cent, and plans are afoot to take it up, he said.

The attrition has come down to 11.5 per cent because of fewer opportunities being available in the IT sector, which has also helped, he noted.

The operating profit margin widened to 14.5 per cent in the December quarter, Sapre said, adding that the company aims to take up the number by 2-3 percentage points over the next three years after exiting FY24 with 14.5-15 per cent.

Apart from utilisation, the company has levers, including the possibility of lower facilities costs which went up with the return to work, lower sales and marketing expenses as the revenue growth kicks in and the ramping-up of a recently announced deal in the healthcare space, which required upfront spends to help the margins, Sapre said.

He exuded confidence that by using all the levers, the operating profit margin would improve consistently.

On the overall business scenario, Sapre said the discretionary spending will return over the next two quarters and added that clients are more optimistic right now when compared to the situation a year ago.

However, the company, which reported a total contract value of USD 521 million in December, said the conversion of deal wins to revenues is not happening, as it was earlier because of the weaker sentiments.

The “leakage” of the ratio between deal wins translating into revenue bookings was in the mid-single digits and has gone up top 8-9 per cent now, he added.

The company is focusing its efforts on bagging more long-term engagements from clients, he noted.

For the December quarter, its net profit jumped by over 20 per cent to Rs 286.13 crore against Rs 237.95 crore in the year-ago period, and the overall revenue was up 15.2 per cent at Rs 2,498 crore. PTI

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