IT companies go all out to stop attrition of skilled young staff

KOLKATA/BENGALURU: IT companies are doubling down on efforts to prevent young employees skilled in digital technologies – and other high-performers — from jumping ship, as they grapple with rising attrition rates.

The software services providers are looking to stem the talent outflow through better salary increases, promotions and bonuses for top talent, as well as overall employee value proposition, which includes career growth, and learning and reskilling opportunities.

“At an industry level, average attrition has increased by around 1%. But, in specific pockets such as employees having hot skills in new technology areas, or those in Tier -2 cities - which are becoming more prominent tech hubs, attrition seems to be on the rise,” says Debasmita Das, principal – careers and hi-tech industry lead at consulting firm Mercer.


Employees with 3-7 years of experience are most in demand, given the significant traction for premium skills in this experience bracket, she says. Also at high risk are the experienced and senior level individual contributors.

High attrition fuels increased focus on retention
In the April-June period, several leading IT players including Infosys, Wipro and Cognizant reported higher attrition numbers. For Cognizant, it jumped to 23% against 19% for January-March. Infosys reported 23.4% attrition (including people who were let go) compared to 20.4% in the preceding three months.

At Wipro, the attrition rate in the quarter was 17.6%, up 1% over the last 12-18 months.

The company has rolled out new initiatives for high-performing talent and stepped up reskilling efforts. It has given retention bonuses of Rs 1 lakh to junior level employees to stem attrition.

“We recognize the contribution of high performers by offering them better opportunities and substantially higher increases. They are rewarded with promotions and managerial roles where they are entrusted with team-leading responsibilities. We also offer them opportunities in client-facing roles,” said Ayaskant Sarangi, senior vice-president (HR), Wipro.

Cognizant recently established a Transformation Office to review various focus areas, including how to attract, develop and retain talent. In the last 18 months, the company has reskilled and up-skilled more than 140,000 associates, enabling them with high-end digital skills to choose career paths based on competence.

“Our goal is to accelerate revenue and margin growth, while ensuring a performance culture built on meritocracy. We have also executed a retention program for our most talented leaders at the director level,” said a Cognizant spokesperson. In July, Cognizant handed out about $48 million in retention awards to stop key talent from leaving amid high attrition.

Infosys CEO Salil Parekh recently told ET that the company has put together a task force led by chief operating officer Pravin Rao to identify the root causes of attrition. The IT bellwether is building a set of actions based on that, which will be rolled out over the next few quarters.

Regrettable attrition a concern
While a certain attrition rate is a given and even healthy as it helps organisations infuse new talent and manage margins, regrettable attrition (high performers, critical talent, employees experienced in new technology areas) becomes a concern as the replacement cost can be high and the lost time may affect business.

At IT firm Mindtree, which saw an acrimonious takeover by Larsen & Toubro, attrition in April-June was 15.1%, compared to 12.2% in the corresponding period last year. “The percentages don’t matter. It’s the quality of attrition that does,” says Anish Philip, VP (people function), Mindtree.

The company launched a programme for 25% of its top performers at junior level, to have them play lead level roles within five years of joining. On top of that, about 1,200 employees are going through a Pillar programme targeted at the top 5%. Mindtree is trying to ensure that attrition in this segment is capped at 10%.

“When we look at retention, individuals don’t leave because of the money; it’s more about the work. Having said that, if someone is a high performer, s/he can get 30-40% hike or even more during a cycle,” says Philip.