Tech talent war: IT firms may see high attrition as demand for tech talent rises – The Economic Times

Clipped from: https://economictimes.indiatimes.com/tech/information-tech/it-firms-may-see-high-attrition-as-demand-for-tech-talent-rises/articleshow/81717625.cmsSynopsis

Between January and March, 5-8% of full-time employees who were onboarded left within the first 90 days.

Indian IT firms are likely to face sharper attrition rates this year on growing demand for talent, a report showed, as they seek to fulfil large outsourcing orders and multinationals shift more work to captive units.

The data from across 100 companies between January and March, prepared by HAN Digital, indicates that one million employees would potentially resign this year, resulting in increased hiring costs for the IT services and Business Process Management firms.

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The technology services industry saw 12% attrition in 2020 amid the Covid-19 pandemic-induced slowdown. By the end of 2021 however, the IT-BPM sector is likely to look at a 22% attrition rate.

“This trend will make a dent on the cash flow of the major employers as attrition cost is way above hiring costs,” Saran Balasundaram, founder and CEO of HAN Digital, told ET.

“We expect to see nearly one million resignations this year, in the IT-BPM industry,” he added.

Between January and March, around 5-8% of full-time employees who were onboarded left within the first 90 days.

The report said HR leaders at large companies and contract staffing experts believe the trend would continue till year end.

IT-BPM industry association Nasscom said companies are staring at higher attrition due to the growth in demand after a prolonged lull last year.

“It varies from company to company. Last year, every company upped their utilization, and they are now recognising the importance of a bench and hiring more. This is also resulting in higher attrition,” said Sangeeta Gupta, chief strategy officer, Nasscom.

India’s technology industry has seen a massive revival, both within the country and from global companies as they look to transform their technology infrastructure to enable access to applications remotely. Companies across the world are rewriting legacy code to modern software, shelving their data centres to move their applications to the Cloud.

They are also looking to build new business models based on transactions and user data and grow their business. This has also led to growing demand for professionals who are trained to work on these projects.

IT professionals stand to gain from a higher attrition rate.

“This trend will help job-seekers increase their salaries by an additional 15-25% and gain more savings potential as the critical mass of employees will continue to work from home till December 2021,” said Balasundaram.

The industry witnessed subdued hiring and lower attrition during 2020 owing to the outbreak-induced slowdown.

“Now, with more deals, hiring plans are exploding,” he said.

Industry analysts believe the IT-BPM industry will see one million resignations, since a 22-23% attrition rate on a projected base of 4.6 million employees works out to around one million people.

“Along with the organic growth in demand due to increased IT spend and inflow of large-scale projects, the job market will be buoyant for talent that maintained a low profile last year,” said Kamal Karanth, co-founder of specialist staffing agency Xpheno.

With many IT transformation projects coming up in the market, companies are ramping up their workforce and ready to offer higher salaries and that is causing a higher attrition, said Deepak Agrawal, chief executive officer, TurboHire.

Tata Consultancy Services, Infosys, Wipro, and Tech Mahindra did not comment citing the silent period before quarterly results, while HCL Tech did not respond to ET’s queries.

Karanth of Xpheno also said the lower net additions due to the short-term Covid-19 impact were in the correction zone now, resulting in the release of pent-up demand in the job market.

“It will be interesting to see their employee cost in the next quarter and this year overall,” he said, adding that it would, however, be a “zero-sum game” as a majority of IT professionals resigning from their jobs would still be employed within the industry.

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