Infosys and Cognizant both saw attrition cross 20% in the quarter to June, implying that they are now losing a fifth of their workforce. Wipro’s attrition touched 17%. Only Tata Consultancy Services attrition fell marginally to 10.9% in the quarter.
Infosys, Cognizant and Wipro attributed the higher attrition to a great demand for talent as growth returns to the IT sector. Cognizant’s attrition, at more than 22%, was also impacted by a stricter performance management system.
Indian IT firms are seeing customers award larger digital deals in recent months but the contracts are still not enough to retain people who are retrained in newer skills. At the same time, they are also seeing their customers who have expanded their operations in India poaching employees to meet their needs.
Companies are now taking steps to pull back rising attrition and are also raising the number of people they hire from the market. “We are making changes in very specific ways in the compensation model, the timeline of when the compensation is rolled out, how we are doing the movement of expanding leadership and promotions within the company. And my sense is, as that starts to be more properly explained and disseminated within the company, we will start to see an impact,” Salil Parekh, CEO at Infosys, told ET in an interview. Parekh said the changes were put in place in the start of the first quarter and would begin to show an impact in the year ahead. Cognizant has also said it hopes the compensation changes its plans to put in place in the third-and-fourth quarter would help curb its attrition amount.
“We expect our regular annual pay increases, which take place in the third and fourth quarters, to help retain our highest performers,” Rajeev Mehta, president at Cognizant, said in a post-earnings conference call. Cognizant has also announced a plan to cut about 200 senior-level jobs as a move to allow junior employees to grow. The company also split the timing of its raises and promotions.
Junior employees at Cognizant will receive their hikes and promotions in the third quarter of the year, while senior employees will receive their hikes in the fourth quarter. Treating the two types of employees differently is likely a result of where the demand and, hence, attrition is the highest. “In my view it is a demand supply issue. The majority of the attrition is in the 3-5 years category; people who are becoming full stack engineers and kind of stuff,” Saurabh Govil, head of human resources at Wipro, said. Infosys had also said it was seeing higher attrition in the 2-4-year category of employees. Higher attrition and a pickup in growth is driving an increase in the number of employees.