High Rates Of Attrition In Indian IT Sector Continue

by Arjun Banerjee 1 month ago Views 1750

IT Sector Retention Rate Attrition
The Indian IT Sector is seeing a high rate of attrition in the post pandemic era as work returns ‘back to normal’. As of September 30, i.e., the end of Q2 2021attrition rates in all the major Indian IT companies have seen significant increases. Cognizant, whose workforce is majority Indian, has reported a sharp increase of 10% in attrition rates.

Attrition refers to employees leaving the organization for reasons that are not employer-initiated, i.e., for reasons other than being fired, such as resignation or death. Attrition causes a strain on company resources and has the potential to create disruption in productivity too.

One of the factors is the fact that the job losses caused in the IT sector during the pandemic has not been made up for. This lack of complete reabsorption is also driving the profits of top companies as reflected in the new highs being set in the stock market. The situation is one of high demand for skilled employees who are in relatively short supply.

Saurabh Govil, President & Chief Human Resources Officer at Wipro Ltd had saidin August that “Attrition has always been a concern for the industry however now we are witnessing an unprecedented war for talent”.

“Given the growth environment in the industry, we see attrition. We see continued pressure. We see attrition picking up in the first quarter [April to June]”.

In August this year, CMIE MD and CEO Mahesh Vyas said that the employment was 5.7 million lower on a yearly basis. He further pointed out that a majority of these lost jobs were in the urban areas (3.7 million) and that the employment recovery for salaried class was significantly slow. Urban Imda also suffered disproportionately from job losses. It accounts for 32% of all jobs but suffered 65% of job losses according to the analysis current till August 2021.

This shortage of appropriately skilled employees is causing ‘talent poaching’ and high turnover rates as employees get better offers elsewhere and companies are struggling to retain them.

The post-pandemic recovery in employment has been uneven, with the IT sector offsetting the job losses in sectors such as retail and manufacturing. CMIE data for February to April 2021 showed that 8.6 million salaried jobs had been lost, but the IT, Pharma/healthcare, and e-commerce/warehousing were increasing their hiring.

The emergence of the IT sector in terms of remote work and education saw increased opportunities in the market. The Hindu (June 2021) quoted Sudhakar Balakrishnan, group CEO of HR firm FirstMeridian Business Services, saying that “In IT, demand has increased for skilled technical job roles such as sales developer, application developer, site reliability engineer and lead consultant. Some specialised roles are commanding a wage premium of 30- 50%”

Reasons For IT Attrition

of the main reasons for the high turnover is the boom in tech startups and projects that are willing to pay competitively. Smaller companies are jostling in this emergent space for a limited pool of talent. Digitalization of businesses, improving remote connectivity and communications, and transformation of work and education models have all created a new business space, such as the booing EdTech sector in India among others. This has caused a rising demand for technical and data analyst jobs.

TeamLease India, an entry-level, blue collar job portal, released a report for the quarter ended June 30, 2021 which showed that attrition in the IT sector was among the highest at 8.03%. After that were educational services at 7.45% and knowledge process outsourcing at 7.38%. The IT sector was the one that showed a significant uptick in attrition

Hiring in the job market sped up in the month of August this year, with the job market seeing 89% annual growth as reported by Naukri.com. The IT sector posted an annual growth in hiring of 79%. Similarly, the maximum bounce back in job hiring as compared to pre-pandemic 2019 levels were the IT hubs of Bengaluru (66%), Hyderabad (61%), Pune (54%), and Chennai (30%).

Therefore, it can be seen that there are favourable conditions in the market for high rates of attrition. Employees are seeking and finding better opportunities in a market where skilled supply is limited.

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