(PTI) Fears of global recession and spate of layoffs in the start-up space are expected to have a sobering effect on high attrition levels in Indian IT industry over the next 2-3 quarters, say market watchers as majority of large tech companies talked of easing of supply side pressures in September quarter.
Infosys, whose high levels of attrition had alarmed analysts at one point, reported lower attrition of 27.1 per cent in just-concluded quarter, compared to 28.4 per cent in June quarter.
For Wipro, the attrition came down to 23 per cent in Q2FY23, from 23.3 per cent in the previous sequential quarter. The attrition rates for HCL Tech had been rising since quarter ended September 2021 (15.7 per cent in Q2FY22), but it plateaued at 23.8 per cent in Q2 FY23, holding on to the same levels as June quarter (Q1FY23).
"It has already stabilised, and it is early indication of where we are in terms of what we look forward to, from here on. So we are in a good place there," Ram Sundararajan, Chief People Officer of the Noida-headquartered HCL Tech said during Q2 earnings briefing.
Tata Consultancy Services (TCS) said its LTM or Last Twelve Months attrition in IT services inched up further to 21.5 per cent but the company was quick to add that it will start seeing the churn "settle" in the coming months.
The technology job market which had overheated in the last few quarters has begun to cool off, and compensation expectations of new hires are also becoming more realistic, the company said during the earnings call.
Overall, the Q2 scorecards of Tier 1 Indian tech companies have clear markers that supply side pressures are set to ease.
Milind Lakkad, Chief HR Officer of TCS said, "With supply catching up across the industry, the pressure to poach experienced talent is easing. So, we should start seeing the churn settle in the coming months. Based on the monthly trends, we believe our quarterly annualized attrition figure has peaked in Q2 and should start moderating in the second half."
India's largest IT services company saw net additions of 9,840 employees during the quarter, with closing headcount of 6.16 lakh professionals.
TCS said its FY 23 fresher onboarding is proceeding as per plan. The company has honoured all offers it made and onboarded 35,000 freshers in fiscal's first half and with 20,000 brought onboard in Q2 alone.
Infosys -- which competes with TCS, Wipro and HCL Technologies in the top deck on outsourcing contracts -- reported a respite on attrition levels, which have been hovering higher than peers.
"Our attrition has been decreasing now for three quarters on a quarterly annualised basis, including now in Q2, and we see this trend along a downward trajectory," Infosys CEO Salil Parekh said during the recent earnings call.
The Q2 report card of Tier 1 Indian IT companies last week came amid challenging macroeconomic scenario in US and Europe, the mainstay for Indian IT industry.
The storm clouds over global economy have prompted economic commentators to flash warnings about recession risks and international market shocks up ahead.
Reports suggest that US-based companies, including many tech firms, have cumulatively laid off thousands of employees in 2022 alone, and slammed brakes on hirings.
Back home, market watchers are divided in their opinion on whether the cost optimisation agendas of US and European companies will continue to yield significant outsourcing gains in favour of Indian service providers in coming quarters, enough to offset any slowdown or pause on discretionary IT spends by clients under duress.
Wipro's voluntary attrition measured in the trailing 12 months for the quarter was at 23 per cent -- a moderation of 30 bps from the June 2022 quarter. Its attrition rate was low at 20.5 per cent during Q2 of FY22.
As of September 30, 2022, Wipro's employee count in IT services increased to 259,179 from 258,574 at the end of June. Wipro added 605 net employees.
Industry veteran Ganesh Natarajan observes that despite the gains on employee retention in the just-ended quarter, the industry attrition is still higher than levels seen in the past.
He expects the attrition levels come fall to late teens in the next few quarters, as the macro economic worries are bound to weigh in on minds of IT professionals, who up until sometime back were spoilt for choices with multiple job offers in the market.
"Most people are realising that in times that are tough, the larger companies will do well, compared to smaller firms. So, this may not be the time to jump. Also people are worried about collapse of some start ups," Natarajan said.