External factors add to Infosys' struggle to contain rising attrition

Lack of onsite projects, better pay offered by global captives, and rising utilisation level seen as key reasons for high attrition

A number of external factors are making tougher the challenge of persuading staffers to stay on at Infosys Technologies, the country’s second-largest information technology (IT) services entity.

As with other IT majors, this has never been an easy task. In recent quarters, Infosys had seen a rise in what is termed ‘attrition’. The reasons included internal turmoil from the leadership transitions it has had and comparatively lower increments in past years.

The Bengaluru-headquartered firm is now also having to address the lack of enough on-site job opportunities and competitive pay being offered by global companies for their captive centres. 

In the quarter ended March, Infosys reported a consolidated attrition rate of 20.4 per cent, a rise of 50 basis points over the earlier quarter. This is one of the highest attrition rates in the IT sector, far higher than larger peer Tata Consultancy Services’ (TCS’) 11.3 per cent in 2018-19.

Chief Operating Officer U B Pravin Rao last Friday said, “A big part of this attrition is for people with three to five years experience. For this set, the earlier value proposition was on-site (foreign posting) opportunities, which was a big thing. But, given all the mobility challenges due to restrictive visa regimes, these opportunities are fewer. That is probably one reason why they (these employees) look forward to move to other opportunities, where either they are able to get higher compensation or different kinds of jobs.”

Sector experts said there were other reasons, too. “The H1B visa (issued by the US government) issue has affected the whole industry, not Infosys alone. Also, hardly one per cent of the total workforce gets on-site opportunities. Another reason could be higher utilisation levels ahich the company has seen in recent quarters,” said the personnel manager at a staffing company. “Lower levels of (pay) hikes at the entry level in past years has its role, though the company has started a course correction in this regard.” 

Infosys had relaunched an earlier employee stock option plan (ESOP) for junior to middle-level management staff from 2016-17. And, brought down its utilisation level (excluding trainees) to 82.3 per cent in the March quarter, from 85 per cent a year earlier. “High levels of employee exit for Infosys doesn’t make sense, as there is not enough demand in the market. Perhaps employees are now opting for captives run by multinational corporations for better salary,” said Pareekh Jain of Pareekh Consulting.

A former top official at Infosys said it should re-look at the issue of high attrition. “All the ‘soft’ issues — flexi timing, dress code and others — have already been taken care of by the company. Variable payout and salary hikes have been increased for junior and mid-level employees. Despite all these, if attrition is not coming down, then Infosys should look at its employee practices, at the managers’ end,” said V Balakrishnan, chairman of Exfinity Venture Partners, a former head of finance and of the board of directors at Infosys.