IT companies — Tata Consultancy Services (TCS), Infosys, Wipro and HCL Tech, among others — are facing high attrition rates and the IT sector’s average attrition rate (last twelve months) is currently as high as 25 per cent. The past few quarters have seen higher attrition rates, and the hiring has slowed. Experts said the primary reason for high attrition is that the growth opportunities are now relatively lesser in the IT sector as compared to other sectors.
This week, Infosys reported voluntary attrition of 27.1 per cent for the September 2022 quarter (Q2FY23). Although it was lower than the previous quarter’s 28.4 per cent, it is higher on a yearly basis as compared with the 20.1 per cent recorded in Q2FY22.
HCL Tech’s attrition (last twelve months) remained at 23.8 per cent in Q2FY23, TCS attrition rate in IT services was 21.5 per cent during the September 2022 quarter (higher than 19.7 per cent in the previous quarter and 17.4 per cent in the March quarter). Wipro’s voluntary attrition, measured in the trailing 12 months for the quarter, was at 23 per cent, a moderation of 30 bps from the previous quarter, the company said.
Neeti Sharma, president and co-founder of TeamLease Edtech, said, “High attrition has been a problem in the IT sector for a fairly long time. However, the past few quarters have seen higher attrition and with the conversations around the ‘Great Resignation’ and ‘Great Movement’, the problem has been highlighted to a larger extent.”
Sharma added that along with the growth opportunities in the tech sector and start-ups, there has been a 3x growth in requirements for tech skills in non-tech organisations. The demand increase has resulted in employers identifying creative ways to attract talent, the attrition across the sector has been extremely high.
Neha Bagaria, founder and CEO of women career platform JobsForHer, said, “The corporate universe has been facing challenges in hiring and retaining the right people at work. If the issue is not addressed on priority, it can turn into a talent crisis and can have a negative impact on businesses worldwide.”
TeamLease’s Sharma said, “With the emergence of the gig economy, millennials and Gen Z have options apart from traditional career paths. Flexibility and work-life balance are primary motivators for the current generation and this could be another possible reason for the 25 per cent (average) attrition rate in the sector.”
Hiring In IT Sector
The IT companies globally, including in India, are also going slow on the fresh hirings and moreover resorting to layoffs. Leading chip maker Intel is planning to lay off thousands of employees in order to cut costs. Previously, tech giants Microsoft, Google and Tesla have already announced layoff of employees.
Major IT companies, Infosys, Wipro and Tech Mahindra, have also revoked offer letters they extended to students after the companies are delaying the onboarding process for months, according to media reports.
What Experts Say On The Solutions
TeamLease’s Sharma said that while there might not be a one-size-fits-all solution to this problem, there are many things that can be taken to reduce attrition in the long run. There is an abundance of talent in India’s Tier-2 and Tier-3 cities and hiring from this talent pool, IT firms must also look at becoming more employee-centric and offering cross-skilling or multi-skilling programmes that help employees stay engaged.
“Employee recognition at the workplace also plays a significant role in retaining them. Meaningful 360-degree feedback programmes on a quarterly basis will also enable IT firms to understand employee grievances and needs. Two-way communication is a requirement for the current generation and this will also provide valuable insights into their thought process. From an HR perspective, there needs to be a generational shift in terms of the hiring mindset. Collaborative hiring, reducing inflated salary packages, and diversifying the hiring pool is also necessary,” she added.
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