Information Technology Sector's Worst Nightmare Over

Attrition, the worst nightmare of the information technology sector, has dipped considerably in FY12 helped by an improvement in macroeconomic conditions and employee retention programmes.

At Tata Consultancy Services (TCS), 12.2 per cent of the workforce quit in FY12, lower from 14.4 per cent a year earlier. While at IT major Wipro, attrition dipped to 17.6 per cent in FY12 (22.3 per cent in FY11).

Attrition at second-rung Infosys Ltd fell to 14.7 per cent (17 per cent in the previous year) and at HCL Technologies to 15 per cent from 17 per cent. Hexaware Technologies, which follows a calendar year, saw 11 per cent of its employees putting in papers compared to 16.4 per cent a year ago.

"Hiring picked in the year 2010-11 after the slowdown as the pent-up contracts had to be executed. Most IT firms resorted to lateral hiring (recruiting of experienced personnel) during the year to execute these orders resulting in an increase in attrition," Ankita Somani, IT and telecom analyst with Angel Broking, said. "However, the lateral hiring in FY12 was not as high as that a year ago while generous salary hikes of an average 12 per cent also helped in retention of employees across the industry," Somani added.

The IT industry witnessed an average attrition of 17-25 per cent in FY12 while the average attrition across sectors-manufacturing, banking and others-was at about eight per cent. The software industry clocked one of its highest attrition rates in FY11.

Attrition, which is defined as employees resigning or retiring and does not include people who were fired, has a direct relation to the growth of the sector and India's GDP. When the industry is expanding, new firms set up shop and hire employees on a higher salary, which leads to resignations.

"Apart from economic reasons, the fall in attrition in 2011-12 was also due to the rise in retention and employee satisfaction programmes undertaken by IT firms. Retention techniques, including job rotation, internal reshuffling of jobs, giving additional responsibilities, and, of course, wage hikes were other reasons," Surabhi Mathur Gandhi, senior vice-president (IT sourcing) at staffing firm TeamLease Services said.

Ajoy Mukherjee, executive vice-president and head, global human resources, TCS, said, "Our efforts to increase retention by engaging with our employees and offering them a progressive career path is paying dividends with attrition rates falling further to 12.2 per cent."

Business Process Outsourcing (BPO) firm WNS also recorded a much lower fall in resignations in FY12 despite its presence in the high-attrition segment as the company was "continuously working" towards addressing the issue. "The fourth quarter attrition rate was 39 per cent. On a yearover-year basis, attrition is down from the 45 per cent we reported in the fourth quarter of last year," WNS Group chief executive officer Keshav R. Murugesh said adding, that it is a challenge for the Indian technology and the BPO industry.