Happiest Minds tightens skill scrutiny as attrition climbs to 18.2%

As demand weakens and client expectations shift, Happiest Minds is enforcing tighter evaluations and reducing talent mismatch to align with growth and cost goals

Mid-tier IT services firm Happiest Minds, whose attrition rate soared to 18 per cent in the first quarter of the financial year 2026 (Q1FY26), has said it was reassessing its talent base and employee skill sets to address incompatibility between demand and skill sets, even if it means letting go of some of the talent base.

 

It comes against the bleak backdrop of an uncertain demand environment and on the heels of industry major Tata Consultancy Services’ move to fire 12,000 employees.

 

“We are relooking at our own skill sets, the incongruencies between demand and skill sets by talking to people because they would not want to stick on where there is nothing for them to do or there is no project,” Managing Director Venkatraman Narayanan told Business Standard during an interaction after the company announced its first quarter results. 

 

 

That means the company is asking some of its employees to leave if their skill sets do not match or if they are reluctant to upskill.

 

When asked if that is one of the reasons why the company’s attrition rose to 18.2 per cent in the first quarter, from 16.6 per cent sequentially, Joseph Anantharaju, co-chairman and chief executive officer, said it is a “mixture” of a couple of factors.  

 

“We are re-evaluating our people during the training and evaluation process and they may just feel this is not something that’s cut out for me and move on. We don’t really capture that data separately. We’ve been a little stringent on our evaluation for the last three years,” he added.

 

Happiest Minds had 6,523 employees as of June 30.

 

While conducive business environments gave companies the leeway to carry a big bench or excess capacity, that factor has now being thrown out of the window as enterprises go all out to control cost and protect margins.

 

“Now I think is a time when you can really relook your talent base. We’re doing some of that. So all of this is contributing. At the same time, we are very cognisant that we need to keep this number (attrition) maybe 2-3 percentage points lower. And you know, we’re looking at various people, engagement activities to keep people engaged and bonded,” the CEO said. 

 

The company on Tuesday reported an 11.9 per cent on year jump in consolidated net profit at ₹57.1 crore for the first quarter of financial year 2026 (Q1FY26). Revenue on constant currency was up 17.5 per cent and the company said it was on track to clock double digit growth this financial year.

 

The company is also focusing on large deal accounts by pushing the boundaries of its engagement with clients.

 

As part of the move, smaller accounts, with revenue of $2-3 million, would be pushed to generate about $5 million revenue while accounts yielding $5-10 million will be pushed to the $20 million category.