What's behind record staff exits at Indian IT giants?

 The war for talent has become a problem facing the IT industry amid an acute shortage of digital skills. Let us look at the reasons behind the issue and what the companies are doing to tackle this

If you are an IT worker in India, there is a chance you would have contemplated switching jobs in the past year or may have already done so. India’s biggest IT companies are grappling with a talent crunch which they expect to persist for some time.

The country’s top four IT exporters – Tata Consultancy Services, Infosys, Wipro and HCL Technologies – reported a steep rise in voluntary attrition in the July-September quarter. This threatens to weaken demand, which has been quite robust in the wake of the coronavirus pandemic outbreak, with global businesses accelerating their digital transformation.

The trailing twelve-month (TTM) attrition rate at TCS, although the lowest among the top four at 11.99%, is a jump from 8.6% in the previous quarter. Infosys, Wipro and HCL Tech saw their numbers touching new highs of 20.1%, 20.5% and 15.7%, respectively.

Nasdaq-listed Cognizant, which has a majority of its 300,000 employees based in India, witnessed an attrition rate of 31%.

Giving an indication of how bad the situation was, Infosys COO Pravin Rao said that he had not seen such a scale of war for talent in his over three decades of experience in the IT industry.

Speaking to Business Standard, Wipro CEO Thierry Delaporte said the attrition rate was higher than what the company would like it to be.

Several reasons can be cited for a shift in employees’ mindset. This phenomenon is not limited to just the large service providers but is also seen at their clients.

Companies are seeing most of the resignations at the junior level. For some of this, the industry has itself to blame. Entry-level salaries have been stagnant for more than a decade. And a majority of the attrition is taking place among employees with three to six years of experience. At this experience level, their salaries increase considerably when they switch jobs.

Former Infosys CEO T V Mohandas Pai also said that it made sense for freshers to switch companies after a few years since their salary hikes at the existing company were linked to their pay at the time they joined.

Despite the current situation, Infosys says it does not see the entry-level salaries dramatically changing in any way, since it invests a lot in training freshers so they become productive.

A significant part of IT companies’ growth is coming from areas like cloud computing, big data, artificial intelligence, machine learning and cybersecurity. There is a severe supply deficit in these areas which allows highly-skilled workforce to constantly shop for better opportunities.

According to IT industry body NASSCOM, India’s demand for digital talent jobs is eight times larger than the size of its fresh talent pool. By 2024, this demand is expected to become 20 times the available fresh talent pool.