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What's behind record staff exits at Indian IT giants?

The war for talent has become a problem facing the IT industry amid an acute shortage of digital skills. Let us look at the reasons behind the issue and what the companies are doing to tackle this

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IT giants | IT Industry | IT companies

Krishna Veera Vanamali  |  New Delhi 

If you are an IT worker in India, there is a chance you would have contemplated switching jobs in the past year or may have already done so. India’s biggest are grappling with a talent crunch which they expect to persist for some time.

The country’s top four IT exporters – Tata Consultancy Services, Infosys, and – reported a steep rise in voluntary attrition in the July-September quarter. This threatens to weaken demand, which has been quite robust in the wake of the coronavirus pandemic outbreak, with global businesses accelerating their digital transformation.

The trailing twelve-month (TTM) attrition rate at TCS, although the lowest among the top four at 11.99%, is a jump from 8.6% in the previous quarter. Infosys, and HCL Tech saw their numbers touching new highs of 20.1%, 20.5% and 15.7%, respectively.

Nasdaq-listed Cognizant, which has a majority of its 300,000 employees based in India, witnessed an attrition rate of 31%. It is hiring 100,000 laterals who are skilled workers in cloud, digital engineering, data and AI, and IoT. It is on track to onboard 30,000 freshers in 2021.

Giving an indication of how bad the situation was, Infosys COO Pravin Rao said that he had not seen such a scale of war for talent in his over three decades of experience in the

Speaking to Business Standard, CEO Thierry Delaporte said the attrition rate was higher than what the company would like it to be.

Several reasons can be cited for a shift in employees’ mindset. This phenomenon is not limited to just the large service providers but is also seen at their clients.

are seeing most of the resignations at the junior level. For some of this, the industry has itself to blame. Entry-level salaries have been stagnant for more than a decade. And a majority of the attrition is taking place among employees with three to six years of experience. At this experience level, their salaries increase considerably when they switch jobs.

Former Infosys CEO T V Mohandas Pai also said that it made sense for freshers to switch after a few years since their salary hikes at the existing company were linked to their pay at the time they joined.

Despite the current situation, Infosys says it does not see the entry-level salaries dramatically changing in any way, since it invests a lot in training freshers so they become productive.

A significant part of IT companies’ growth is coming from areas like cloud computing, big data, artificial intelligence, machine learning and cybersecurity. There is a severe supply deficit in these areas which allows highly-skilled workforce to constantly shop for better opportunities.

According to body NASSCOM, India’s demand for digital talent jobs is eight times larger than the size of its fresh talent pool. By 2024, this demand is expected to become 20 times the available fresh talent pool.

Established software firms are also losing employees to the new-age startups which are in their hyperscaling phase. Flush with funds, startups are drawing software engineers by offering above-market salaries, flexible work arrangements and generous employee stock options (ESOPs). Though it may be an extreme example and an aberration, payments startup BharatPe is even offering superbikes and gadget packages to new recruits in its tech team.

What is also helping employees seek newer roles is the normalisation of the work-from-home (WFH) model after the pandemic. Technology professionals are able to easily explore other career prospects as the recruitment exercise has gone completely virtual.

What are companies doing to tackle their high attrition levels? They are rushing to campuses to hire more freshers. Many have already raised their hiring targets.

Infosys is hiring 45,000 fresher graduates this financial year, up from its previous target of 35,000. is onboarding 78,000 freshers, a big jump from its previous estimate of 40,000. It has already seen net addition of more than 75,000 employees in the first two quarters of FY22. Wipro has also raised FY22 fresher hiring target from 12,000 to 17,000. In all, the four are looking to add over 160,000 freshers this financial year.

The companies have been targeting retention of employees with niche skills. In the past few quarters, they have announced salary hikes and promotions. To increase retention, Wipro is offering new recruits a 5-year plan of compensation growth that is built into their contract.

Infosys said it had focused a lot on employee engagement, staff mobility and introduced new posts such as Digital Specialist.

Nevertheless, the companies expect the attrition rate to increase in the next few quarters before cooling down.

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First Published: Tue, October 19 2021. 09:49 IST
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