Attrition is still a problem but now IT firms know how to tackle it

Happiest Minds uses statistical analysis to look at historic attrition data.

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The Indian IT sector has been dealing with an all-time high attrition rate – averaging around 25 per cent. This can be attributed to the shortage of digital talent, high demand for qualified professionals, and increased wages. What’s fascinating is – they are well able to combat the issue – and their solution is backed by technology. Let’s see how. 

Happiest Minds Technologies’ Senior Vice President and Head of CoR – AI/Analytics Ajay Agrawal told AIM that the company uses statistical analysis to look at historic attrition data. “We have used the same information to improve our hiring process and handle the attrition rate,” he added. 

Indus Net Technologies’ Head of Recruitment, Nidhi Khulbe, said that AI is helping their recruiters process the high volumes of job applications at higher speeds, improving efficiency and productivity. “Recruiters now do not have to scrutinise piles of resumes or go through the tedious job of shortlisting profiles,” she added, saying that this saves time and cost by about 10-20 per cent, as their internal number crunchers have recently reported. 

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“However, we need to be cautious and use tech wisely to maintain or develop human connections through continuous improvement of the framework frequently,” said Khulbe. 

Meanwhile, Tech Mahindra said it uses AI in its services offerings in the business process services segment. Tech Mahindra’s chief strategy officer Jagdish Mitra said that it is a long-term offering to the customer as they are no longer dependent on humans. He said that this could be why their attrition remains stable as people naturally have a chance to upskill to take up higher roles. In a way, this is a talent-retention model, he added. 

TCS’s vice president HR, DP Nambiar, said that based on insights from historical trends and the future pipeline of talent profile we are losing, reasons for attrition, environment factors, and potential indicators are defined. “With modelling and predictive analytics techniques deployed on key indicators, we focus on identifying the associates with high chances of attrition and proactively intervene to retain talent. 

Analytics India Magazine reached out to Infosys, who chose not to comment. Infosys’ president Ravi Kumar S, at the annual analyst day event held last month, said that they have accelerated automation for efficiency and productivity. “We have 24,000 bots. We have something called the BOT factory, and the idea is to constantly re-baseline our productivity so that we stay ahead of the curve in winning large deals, staying competitive,” he added. 

Initiatives to reduce the attrition rate 

To curb the rise in attrition rate, many IT companies have started exploring opportunities to set up bases in their tier II and III cities. Recently, Infosys said it is setting up four new offices in tier-II cities. Accenture opened an Advanced Technology Center (ATCI) in Indore, Madhya Pradesh. IBM also announced that it would hire in cities beyond metros and collaborate with leading educational institutions. 

Here’s an overview of the attrition rate across frontline IT companies: 

Indian IT attrition numbers

Based on the latest financial reports, Cognizant has the highest attrition rate (29 per cent), followed by Infosys (27.7 per cent), Tech Mahindra (24 per cent), Wipro (23.8 per cent) and others. 

Happiest Minds noted high attrition rates in the last financial year. The company’s attrition rate stood at 22.7 per cent in FY22 Q4 from 12.1 per cent in FY21. The company said that it has been taking various steps to improve employee satisfaction and enable growth. Some steps include an additional wage revision cycle, increased engagements and a flexible working environment. 

Besides these, the company said it also focuses on employee growth and learning and development, encouraging and implementing cross and multiskilling. “We also look at 360 feedback to understand our employee challenges and aspirations and work towards them,” said Agrawal. 

Further, he said that Happiest Minds has been a people-centric organisation. “During the pandemic as well, we have been in continuous touch with the employees and supported them, aiming at the physical and mental wellbeing through Tele-medical consultations for our people, MITHRA – The Good Samaritan Program, and partnership with Silver Oak for Employee Assistance Program,” added Agrawal. 

Agrawal said they have also implemented leave donation, exclusive voluntary Covid19 insurance policy, Covid19 leave, and vaccination camps during the pandemic, ensuring our employees can fight it. He said they have taken conscious steps to involve minds in enabling and exploring the latest tools and technologies. 

“We have maintained industry benchmark retention rate, which is lowest among peers across all quarters of FY22,” said TCS’ Nambiar. TCS believes that empowering culture, philosophy of investing in people, career growth opportunities, and progressive HR policies have resulted in consistently high retention levels. In addition, its investments in organic talent development and initiatives like Contextual Masters and Elevate have further reassured employees that the company values them for the contextual knowledge they possess. 

Nambiar said that Elevate has specific targets for employees with different experience levels and correspondingly improved pay packages. He said that these efforts have made TCS the employer of choice and its employee retention record an industry benchmark. “Employee health and well-being measures, SBWS work arrangement and various other HR interventions implemented help in better retention rate at industry level,” he added.  

Will the attrition rate decline? 

Indus Net Technologies said they do not have a ‘growing’ attrition rate. Instead, they have noticed a reduction in attrition percentage for the past two months. In April 2022, their attrition percentage was around 3.16; in May 2022, it was around 1.86. “We are taking a few measures to address employee attrition by offering competitive benefits and perks per the industry standard,” said Khulbe. 

She said they are focusing on appropriate leadership who can achieve goals, nurture talent, and upgrade their skills. “This way, it becomes easier to set the right expectations for the employees and maintain team spirit when things might not work as planned. This attracts talent to stay with us as they see a lot of opportunities to upgrade their skills and follow in the footsteps of their leaders to achieve career goals,” said Khulbe. 

She said that they are also focusing on different engagement methods where they can connect with the rest of the team members and promote a transparent working environment with the management. “If they face any problem, they can talk to anybody instead of silently growing dissent among them,” she added. 

At the earnings call, Samir Seksaria, the chief financial officer at Tata Consultancy Services, said that their attrition in IT services continues to rise on an LTM basis and was at 17.4 per cent. However, the company sees some stability in quarterly attrition with better hikes, improved hiring, work-life balance, and others.

Happiest Mind Technologies Director and Financial Officer Venkatraman Narayanan said there is a massive crunch in the IT industry; it is expected to peak in the next quarter before beginning to plateau. 

Bridging the demand and supply mismatch 

One of the reasons for the rising attrition include startups offering inflated salaries, which induced employees to job-shop more aggressively. But, with a funding crunch, rising inflation, and layoffs across various startups, employees are reconsidering their choices. As a result, nearly 40-50 per cent of employees are leaving startups and are getting absorbed by IT companies. 

With digitisation happening rapidly across sectors, most companies are gearing toward digital technologies, resulting in huge demand for digital talent. As per the NASSCOM report, with the IT industry growing at 11-14 per cent a year, the sector’s revenue is expected to touch USD 350 billion by FY26. 

The dearth of talent across the IT industry is inevitable. Narayanan said that there needs to be a generational shift of mindset towards employment and changing landscape between talent and recruiters, and hiring has now become a collaborative endeavour. He said while the companies need digitally capable people, they don’t have to be engineers as long as they are trained by a finishing school with new digital capabilities. 

On the supply side – there has been a significant rise in digitisation projects across industries. The rising attrition at the mid and senior level at IT companies, in a way, is bringing opportunities for freshers. TCS, Infosys, Wipro, HCL Technologies, Tech Mahindra, Accenture, Capgemini and others have added over 2.3 lakh new graduate talent in FY22. In FY23, they are looking to expand their fresher hiring programmes.

Here’s a quick overview of IT companies hiring in FY22. 

Indian IT freshers hiring numbers

While Indian IT companies are working to the best of their ability to address the rising attrition, be it better salary hikes, flexible work, employee-friendly policies, and expanding offices to tier-II, among other benefits, they are also looking at other means to leverage technologies like AI/ML and analytics to make better decisions, and minimise the gap in their talent acquisition and retention strategy. 

Amit Raja Naik
Amit Raja Naik is a seasoned technology journalist who covers everything from data science to machine learning and artificial intelligence for Analytics India Magazine, where he examines the trends, challenges, ideas, and transformations across the industry.

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