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IT companies battle rising attrition amid demand uptick

India's second largest IT services company Infosys's attrition rate in July-September 2013 was highest in more than six quarters

Itika Sharma Punit Bangalore
Last Updated : Nov 10 2013 | 6:09 PM IST
Even as the Indian information technology (IT) services sector cheers the recent spurt in demand, companies are faced with the challenge of rising attrition levels as employees look to tap new opportunities that are now available in the marketplace.

Most large size IT companies reported a rise in employee attrition rate during July-September 2013, and experts believe that the trend may continue going forward.

“For the last two years, demand was more or less stagnant and even declining for some players. Now as demand goes up and more opportunities come into the market, there will be people shifting jobs,” Ravi Shankar, executive vice president and chief people officer at Mindtree told Business Standard.

“I think that in the next four quarters, attrition may rise further as demand is on a rise. Based on my understanding, attrition may rise by about 100-200 basis points in the next few quarters.”

India’s second largest IT services company, Infosys’s attrition rate in July-September 2013 was highest in more than six quarters. The Bangalore-based sector heavyweight saw attrition rate of 17.3% in July-September 2013, as against  15.0% a year ago, and 16.9% in April-June 2013.

Even as some mid-sized IT companies have managed to keep attrition levels stable-to-marginally lower during July-September 2013, HCL Technologies saw a sharp rise in attrition rate during the quarter.

The company’s attrition rate for the quarter ended September 30, 2013, was at 16.1%, as against 14.% a quarter ago. The country’s third largest IT exporter, Wipro also saw a jump in attrition rate at 15.4% in July-September 2013, as against 13.0% in April-June 2013.

HCL Technologies’ Chief Executive Officer Anant Gupta said that demand uptick was one of the reasons for the rise in attrition, and added, “I wouldn’t be too worried if someone is taking our talent or not. I think we have a very strong brand recall and desire to work in areas of service.”

Experts believe that the attrition rate is expected to rise in the coming months driven by a number of factors. Among other reasons, observers say the availability of better monetary prospects is driving employees to look change jobs.

“One reason could be employees’ dissatisfaction on salaries. In the current job, an employee may get about 5-6% salary increase, but if he switches his job the salary hike could be about 15-20%. Another reason could be the opportunity to go abroad,” Kris Lakshmikanth, founder CEO and chairman of Headhunters India said.

Lakshmikanth also expects a 200-300 bps increase in attrition rate in IT companies over the next few months. But, he said, this would not be a cause of concern, as companies are aware of the situation and would plan accordingly.

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First Published: Nov 10 2013 | 5:57 PM IST

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