Top IT companies struggle to retain staff as demand grows
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Bengaluru: The attrition rates of employees in leading IT companies in India are growing and thereby reflecting the COVID-19 induced demand for IT professionals, as per reports. During the January to March quarter, Infosys' attrition rate increased to 15.2% from 10.0% in the previous three months, while Wipro had a rate of 12.1% on employee strength of 197,712 people.
Infosys has a roster of 259,619 employees as of the March quarter. HCL and TCS, though, managed to keep their attrition rates in single digits of 9.9% and 7.2%, respectively.
"Attrition has picked up, largely reflecting a strong demand environment, but we remain confident of our employee engagement initiatives, vast talent pool and training capabilities to ensure seamless execution," said Infosys Chief Operating Officer Pravin Rao in an online news conference on April 14.
The increased demand for tech professionals has resulted in record profits for companies, with Wipro announcing a sequential growth of 2% to 4% in its IT services revenue to $2.195 billion to $2.238 billion. Infosys reported revenue of over 1 trillion rupees, 10.66% higher than the previous year, and net income of 193.51 billion rupees, up 16.73%.
However, share prices of leading companies have taken a hit as the increase in demand means that existing salaries will have to be hiked to offset employee attrition.
A report by Nomura Global Research noted that earnings before interest and taxes (EBIT) margins at Tier 1 IT companies were down around 50 to 260 basis points, primarily due to wage hikes, higher subcontractor costs and higher headcounts, partly offset by a rise in offshoring and elevated levels of utilization.
HDFC Securities Analyst Apurva Prasad reckons that hiring among companies has been, and will continue to be, robust in the coming quarters because of increased demand for talent as well as to cover vacant positions.
"[Attrition] is in a way a good problem to have," he said in a quote to Nikkei Asia. "The companies that have historically kept attrition in check will be in a better position, because of much better talent practices or scope to grow as well as the brand strength."