India’s big four outsourcers averaged 22.7 percent attrition over the last 12 months, according to their recently published results, and that massive loss of personnel means customers will likely be served by less experienced staff.
The attrition rates ranged from 27.7 percent at Infosys to 17.4 percent at Tata Consulting Services (TCS). HCL Technologies experienced a 21.9 percent attrition rate over the prior 12 months and Wipro 23.8 percent.
With pandemic era digitalization upgrades booming across most industries, the IT consulting service companies have seen a surge in contracts that in turn require sustained staffing.
“We are closing FY22 on a strong note, with mid-teen growth and adding the maximum incremental revenue ever,” said [PDF] TCS CEO Rajesh Gopinathan in a canned statement, while COO N Ganapathy Subramaniam said the company was closing the year with the “highest ever order book.”
TCS was quite pleased with itself for racking up the lowest attrition rate of the group, citing a strategy of “investing in people, and its progressive workplace policies” as reasons for its “industry leading retention in an environment of increased churn.”
It probably also won’t hurt that the company announced raised salaries effective from April 1 (no joke).
In Q4, TCS added 35,209 employees – its highest ever net addition in a quarter – bringing headcount to 592,195.
Wipro also experienced significant growth, although its earnings call and press releases offered curiously little detailed information on hiring and retention.
“We have had an outstanding year, finishing with $10.4 billion in revenues, and an industry-leading growth of 27 percent year on year,” said CEO Thierry Delaporte. “This is our sixth straight quarter of strong revenue growth at or over three percent.”
The CEO said the company doubled intake of new recruits for FY22 when compared to the previous year and planned to do the same in FY23.
“Further, we have decided to increase the frequency of promotion cycles for 70 percent of our colleagues in junior bands, to now a quarterly basis,” said [PDF] Delaporte in the company’s Q4 earnings call.
The four services giants now share an increased focus on attracting freshers and retaining junior workers.
TCS CEO Gopinathan explained in the company’s Q4 earnings call:
Gopinathan said that future attrition is expected to decrease.
Infosys CFO Nilanjan Roy also told a Q4 2022 earnings call [PDF] his company also expects a decrease in attrition.
“The impact that we are seeing now – the impact of putting freshers in … was a rotational churn issue across the industry,” said Roy, who pointed out that it takes time to get freshers up to speed.
The CFO then put his faith in those embarking on a career in IT as the key element for the race to secure talent:
HCL Technologies CEO C Vijayakumar credited the company’s investments in freshers for missing guidance on operating margin [PDF].
“This dip is largely due to the talent model transformation that we are investing in, which involves a large-scale fresher hiring, nearshore delivery scale-up and the talent, skilling and training investments,” said Vijayakumar at HCL’s recent Q4 2022 earnings call.
“We believe that this investment is very timely. What we have been doing over the last three or four quarters has helped us and delivered strong momentum in our services business. And this is also very critical for our medium-term growth and that is the business rationale, which is driving us to invest in the talent.”
But to get a grip on overall attrition rates, the IT service giants are doing more than just hiring freshers. Last week, Infosys was summoned by India’s Ministry of Labour & Employment to discuss the legality of a non-compete clause in employee contracts after the Ministry received a complaint from IT labor rights organization Nascent Information Technology Employees Senate (NITES).
NITES told The Register Infosys failed to show and a new hearing was rescheduled for May 16.
NITES has also filed a complaint recently against HCL Technologies for its creative strategy to prevent attrition.
HCL began prepaying bonuses to workers but then tried to claw them back if the employee resigned. While NITES has alleged that the practice is illegal, HCL Technologies has denied that assertion. The company framed the prepayment of bonuses as a goodwill gesture “to help people with more cash flows” during an investors’ call in January 2021.
According to NITES president Harpreet Saluja, employment at any time is the only criterion required to retain bonus payments already received. Bonus adjustments for poor performance and other variables are applied to future payouts and the clawback creates an undue burden on employees. ®