Companies say work flexibility, compensation revisions will help reign in the rates
Attrition rates of major IT firms in India have peaked and are on a path to moderation in the next few quarters, according to industry analysts and IT company heads. Various initiatives and expenditures that pressured the margins, have started to pay-off to reign in the rising rates.
For the quarter ended June 30, the attrition rates of major IT firms remained high—Infosys was at 28.4 per cent, Wipro at 23.3 per cent, TCS at 19.7, HCL Technologies at 23.8, and Mindtree at 24.5. However, they have indicated that the rising rates will reduce in the coming quarters as they believe the various initiatives introduced previously, as well as increased and compensation revisions will help reign in the rates.
IT major Infosys is giving competitive compensation revisions to employees and is also planning on increasing its hiring target ahead. Infosys’ CFO Nilanjan Roy said, “We are fueling the strong growth momentum with strategic investments in talent through hiring and competitive compensation revisions. While this will impact margins in the immediate term, it is expected to reduce attrition levels and position us well for future growth.”
Wipro this quarter has seen its attrition rate fall marginally from 23.8 per cent last quarter to 23.3 per cent this quarter. The management hopes for the rates to moderate as their quarterly promotion cycles will be of help. Wipro CEO Thierry Delaporte said, “We expect further moderation ahead. Talent investments I believe are paying off. We announced moving to a quarterly promotion cycle, which will be effective, actually July 2022, and salary hikes for all those eligible in September of this year 2022.”
Human resource consultants, too, believe the outlook for attrition rates is positive. Vijay Sivaram, CEO, Quess IT staffing, told BusinessLine, “Attrition rates will start tapering down from Q3 and by next fiscal year, it’ll go back to the old range. Moderation in hiring as firms are getting less aggressive with hiring, changing initiatives around flexibility and working conditions are important factors behind the downward movement.”
With offices opening up firms can have better synergy on the floor than they have virtually, and this will help companies manage attrition. Additionally, the flexibility bought in by moving closer to Tier II and III cities will also play a role, he added.
Although attrition rates are expected to ease, continued long-term investment and strategies are the inevitable coarse to fight attrition. Rituparna Chakraborty, Co-founder and Executive Vice President of TeamLease, an HR services company told BusinessLine, “A drastic fall in attrition shouldn’t be expected, however, gradually a little bit of normalcy will be seen.”
As technology is a high-demand skill, companies have to make long term investments and strategies to build a talent pipeline. Firms can work with academia, government and associations to come up with innovative ways to develop a pipeline, she added.
Published on July 25, 2022