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The attrition rate at the Indian information technology (IT) companies is expected to cool down to pre-pandemic levels by the third quarter of the current financial year (Q3FY24), experts told Business Standard. However, most of these firms will continue to restructure internally, keeping the hiring numbers low.
"Attrition will possibly reach between 16 to 18 per cent in the next two quarters," said Vijay Sivaram, chief executive officer (CEO) at Quess IT Staffing.
"But you will not see a lot of new intake coming in as most of the IT companies are focusing on the utilization of their bench. The companies are deploying their freshers on the new projects as soon as possible rather than hiring talent from outside," he said.
Three IT majors in India recently announced their financial results for the quarter ending March (Q4FY23). Two of these three firms, Tata Consultancy Services and Infosys spoke of demand uncertainty. For FY24, Infosys reported its revenue growth guidance of 4-7 per cent. This means that the company will most likely grow at the slowest pace in six years.
HCLTech, which recorded better results, also had revenue growth at the lower end of its guidance range of 13.5-14.5 per cent.
Attrition at TCS and Infosys was still high at 21.3 per cent and 20.9 per cent respectively. At HCLTech, it was slightly better at 19.5 per cent.
According to Neeti Sharma, president and co-founder at TeamLease Edtech, last year witnessed a shift in mindset among IT candidates as they were looking for more stable opportunities and leaving startups. This contributed to large-scale attrition among startups.
"In the current economic climate, it is likely that more candidates will be looking to sacrifice higher salaries for a stable work environment and thereby looking to move to established IT firms", she said.
The captive industry, especially for IT services, is emerging as an attractive industry for those leaving their jobs from startups.
Vikram Ahuja, CEO and co-founder of recruitment platform Talent500 said that the Indian startup industry has seen a loss of trust in the last six to 12 months due to high layoffs. More people are looking to shift to captive centres.
Average attrition in FY24 to still be high
However, attrition in FY24 is likely to stay high at around 18-20 per cent. This may mainly be due to the high attrition that is likely to continue in Q1 and Q2.
According to Yeshab Giri, chief commercial officer of Staffing and Randstad Technologies at Randstad India, "Hiring would be higher for candidates having skills like data analytics, data visualization, data science, full-stack development, cloud computing, and DevOps."
"Specialist roles such as analytics manager, big data engineers, cloud system administrators, and augmented reality QA testers are likely to be the focus of hiring in FY24," said Sharma.
Giri said that the Indian IT sector is likely to hire between 350,000 to 400,000 employees in FY24. This includes a mix of fresh graduates and lateral hires.
