BackAttrition falls in IT Inc.
Tata Consultancy Services (TCS) Ltd and Infosys Ltd on Thursday reported their lowest attrition in more than two and three years, respectively.
PremiumNEW DELHI,MUMBAI:Tata Consultancy Services (TCS) Ltd and Infosys Ltd on Thursday reported their lowest attrition in more than two and three years, respectively, indicating a muted job market in the growing shadow of artificial intelligence (AI).
In the December quarter, Infosys’s attrition rate at 12.9% was the lowest in 12 quarters, while TCS’s at 13.3% was the lowest in nine quarters. Their highest rates were 28.4% (Q1FY23) and 21.5% (Q2FY23) respectively.
“Open positions in the IT sector have dwindled and candidates are circumspect to change jobs as the impact of AI is not clear yet. Recruitments in IT services are now largely replacement hiring," said Sunil Chemmankotil, chief executive of TeamLease Digital.
The trend is in stark contrast to the 20-30% attrition seen just after the first year of the pandemic, when the IT industry recruited in large numbers, sometimes even offering to double salaries. The job market has taken a complete U-turn since then.
“Attrition is trending down and at 13.3%, is now in our range of comfort. We are committed to hiring from college campuses and growing talent organically," said Milind Lakkad, chief HR officer of TCS.
While TCS said it has started campus hiring from the batch of 2024, Infosys had earlier said it will not conduct campus recruitments this year.
A similar drop in attrition is expected at Wipro and HCL Tech as well, which release their earnings on Friday.
In the fiscal year so far, Infosys saw a net loss of over 20,000 employees, while TCS had a net loss of 11,490 employees. In the December quarter alone, a net 5,680 employees left TCS and 6,101 left Infosys. Exits were even higher in the September quarter.
“The results suggest another tougher quarter ahead for talent in the IT sector. The good news, however, seems to be that the 11,000-odd exits seem to have been absorbed by other IT services companies who still backfilled significant of those thanks to the 13-14% attrition and the 60-plus global capability centres (GCCs) who entered India last year," said Kamal Karanth, co-founder of Xpheno, a recruitment firm focused on tech and startup hiring.
The rapid expansion of well-funded GCCs has been a primary factor driving attrition in the IT sector. Last October, Wipro was the first IT firm to acknowledge how GCCs are luring skilled employees with 4-10 years of experience, offering compensation levels that IT companies cannot match.
The sector is now going through a transformation, where IT firms are training their employees on AI that could also impact jobs. A wider deployment of AI technology by Indian companies will likely make 15,000-20,000 jobs redundant this year, as a large number of coding profiles, system maintenance and support functions at junior levels get automated, according to consultants and recruiters. IT, hospitality and banking industry are trying to upskill their workforce, but they may be the first to see an impact.
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