Even as net hiring went up across the board in the April-June quarter, finding the right talent has been a challenge for IT players.
CHENNAI: Attrition rates at top-tier IT companies have peaked to a two-year high due to a shortage of suitable digital talent in India and on-site. The April-June quarter is traditionally a high-attrition period. But this year, rates have risen sharply in some companies (see graphic).
Infosys reported an attrition rate of over 23% in the recent quarter ended June — an increase of 300 basis points (100bps = 1 percentage point) from the preceding March quarter. Tech Mahindra’s attrition rate was up 21% from 19% in the year-ago period. At mid-tier IT firm L&T Infotech, the attrition rate of 18.3% was over 3 percentage points higher than the 15% in April-June 2018.
“Historically, when business was relatively stable, we used to have attrition of 13-15%. But today, we see a lot of disruptions happening, a lot of shortage of talent, a lot of new technologies coming into place, a lot of demand for skills,” Infosys COO Pravin Rao said in the earnings call. Infosys said a large part of its attrition was at the lower level and also included involuntary attrition. It added that it is working to correct this in the coming quarters.
Traditionally, employees leave for higher studies or collect bonuses and exit in this quarter. But constraint in supply of the right talent in both Indian and US markets is also leading to a rising churn at IT companies, industry trackers told TOI. “We continue to focus on our workforce strategy and management, such as the announced retention programme to recognise and retain our best talent,” Cognizant CFO Karen McLoughlin said.
“Attrition rates increased 20-400bps year-on-year in the quarter and are beyond the comfort range for many companies,” Kawaljeet Saluja of Kotak Institutional Equities wrote in a research note. Though IT companies maintain that this attrition is not impacting project execution, Saluja said it is leading to an increased reliance on sub-contractors to fulfil demand.
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Prabhudas Lilladher analyst Aniket Pande said the tightening of H-1B visa norms has led to a talent crunch in the US, and with lesser opportunities for Indian staff to go on-site, voluntary attrition among freshers is also up. Even as net hiring went up across the board in the April-June quarter and utilisation remained stable at an average 80%, finding the right talent for new-age digital projects has been a challenge for IT players.
