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  • Writer's pictureChesapeake Group

The Great Indian Attrition – How big IT firms are working towards a more sustainable employee base

Jon Stewart, legendary comedian and the erstwhile host of the Daily Show, talked about the satisfaction aspect of a job in a recent podcast. “A lot of people want to feel proud of their work… often times there is a fulfilment aspect of it [the job] for them,” Stewart said. Of course, Jon was referring to the service / gig economy driving the e-Commerce industry in the US, but his observations are very relevant in the world of Indian technology service providers as well.

Over the last few months, major IT services providers have reported record attritions – Cognizant was highest at 33% (Sep quarter results), Infosys at 25%, Wipro at 23%, HCL at 20% and TCS lowest at 15%. Sub $100 million companies have also been hit hard – with attrition hovering around 20-25%.

Unicorns offering much more to techies

In 2021 alone, India produced over 30 unicorns (mostly product or SaaS companies) – highly funded, cash rich and doubling headcount each year. Technology talent are being lured away by these companies through significant increments in annual salaries and stock options. But hard numbers are not the only factor here. The softer aspect is probably more important – technology personnel, in general, find that working for product companies is more fulfilling than billing 8 hours a day. Startups are far more engaged with employees, middle management have direct access to founders and CEOs, teams are smaller and more intimate. The overall learning experience is much more challenging for today’s far more ambitious 20 somethings. It is easy to get lost in a large IT company with over 100,000 employees.

Higher satisfaction vs. higher compensation

This takes us back to the 90s, when IT company companies, not unlike today’s Unicorns, were luring away employees from manufacturers. Yet the Tata companies – Motors and Steel – were able to retain their respective staff effectively. Anyone who has been to Jamshedpur (the heartland of Tata employees) in India can feel the sense of community that the Tata Group created amongst its employees. Several thousand employees became, and still are, TATA life-ers. This, again, sense of fulfilment percolates throughout other TATA group companies and is one of the key reasons behind the group’s success. Most people will let go more money for better job satisfaction.

HCL is taking steps to curb attrition through its “Hire to Retire” program, using gamification and machine learning tools to address dissatisfaction at work. A key component of this is moving to a more proactive approach of addressing concerns of employees rather than a reactive approach that tries to determine the same when the employee has already made the decision of resigning. We all know how exit interviews go.

Other IT giants are investing in similar programs through upskilling & reskilling opportunities, and talent retention programs.

Of course, compensation is always a factor. However, this is more of short-term phenomenon. It is difficult to see how product companies will be able to sustain high salaries in the long term, as today’s “digital” technology expertise becomes more commoditized in the future. IT attrition may come back down over the long term and salaries will stabilize. However, creating a rich experience for employees is key to long term success. India is simply no longer a place for low cost “resources”.


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