Attrition to continue to spike even as IT biggies reduce hiring: Experts

HR experts also point that pre-pandemic industry attrition was in the range of 12-13 per cent, to come back to that level is going to take some time.

It will take another few quarters for the pace of employees voluntarily leaving companies in the information technology (IT) sector to come down meaningfully. Human resource (HR) and industry experts point out that the demand for skilled talent remains high — not only from services players but from multinational corporations (MNCs) as well, keeping attrition levels above 20 per cent for 2022-23 (FY23).

The top four Indian IT players have offered diverse comments on attrition, although attrition tapering seems the underlying component.

Tata Consultancy Services (TCS) — the country’s largest services player — said for attrition to go below 20 per cent will take anywhere between three and four quarters. Wipro and Infosys, which reported a drop in attrition for three straight quarters, still have attrition well above the comfort zone. Infosys’ attrition for second quarter (Q2) of FY23 came in at 27.1 per cent; for Wipro 23 per cent.

HCLTech said it is in a comfortable zone and sees attrition coming down. It reported attrition of 23.8 per cent for Q2FY23.

“Going by how attrition for the past 12 months is calculated, that number will not come down significantly. Even after four quarters, the number may not be close to what we are hoping for. To get it below 20 per cent, we may need at least four quarters,” said Milind Lakkad, chief HR officer, TCS.

A R Ramesh, director-digital business solutions, professional staffing and international engagement at Adecco, alludes to attrition for FY23 hovering over 20 per cent, notwithstanding global recession impacting hiring in the top four IT firms.

“The demand pipeline has not completely shrunk. It is 25-30 per cent of what it was at the beginning of the year, but still healthy. Demand for high skill and multi-skill talent continues to be there,” added Ramesh.

Although companies have hired newbies in large numbers, it will take time for them to be billable and productive, observed Ramesh. 

“Hiring freshers in bulk will not bring down attrition at mid-level,” he said.

HR experts also point to the fact that the pre-pandemic industry attrition was between 12 per cent and 13 per cent. Returning to those levels will take time.

Experts also highlight the demand for skills in general. For instance, MNCs are continuing to ramp up their captive centres in India.

SAP Labs India, the largest laboratory for the German software firm, plans to hire 2,500-3,000 for calendar year 2022. The other example is Uber. Even though the ride-hailing major a few months back announced it would not be hiring more in the US, its technology (tech) centre in India plans to hire 500 tech employees by December.

A recent Boston Consulting Group report suggested that India will see an addition of 300-500 global capability centres being set up over the next five years.

“Companies in North America may freeze hiring due to demand challenges. However, the past recessions have demonstrated global enterprises continuing to outsource work to India.  In recent times, we have seen three European companies setting up bases in India in the absence of skills in their own market,” said Kamal Karanth, co-founder, Xpheno. 

Karanth also pointed out that IT companies have traditionally procured talent through a ‘build, buy, and borrow’ model.

“The build model is only possible in India as the country has substantial engineering graduates passing out, allowing training and deployment at scale. More work can get parcelled out to India,” he added.

But a slight fall in attrition has meant fresher hiring at the top IT firms have come down. Although both TCS and Infosys have hinted that they may increase their fresher hiring targets for FY23, they are nowhere near their 2021-22 targets.

• TCS onboarded 35,000 freshers in the first half of FY23; sees an additional pipeline of 10,000-12,000
• Infosys hired 40,000 freshers in H1FY23; full-year target is 50,000
• HCLTech hired over 16,000 freshers in H1Y23; FY23 target is 30,000-35,000
• Wipro onboarded 14,000 freshers in first half of FY23