Seven of India's top 10 information technology companies continued to grapple with high attrition rates in the seasonally weak December quarter. Attrition rates across major players such as Tata Consultancy Services Ltd., Infosys Ltd., and Wipro Ltd. increased sequentially while LTIMindtree Ltd. and Tech Mahindra Ltd. saw stable quarter-on-quarter employee reduction.
Industry bellwether TCS reported an attrition rate of 13%, up from the previous quarter's 12.3%; while 70-hour workweek advocate Narayana Murthy's Infosys saw its attrition over the last 12 months increase to 13.7% versus 12.9% a quarter ago.
Attrition rate is the percentage of employees who leave a company over a specific period of time. Attrition rates in the IT sector peaked during and after Covid-19, as the pandemic fuelled a growth spurt with increased investments in technology and remote work.
During this period, IT companies and startups, both in their bull phases, actively hired and offered salary hikes, leading to high attrition. However, as the sector faced a downturn due to macroeconomic uncertainty and declining demand, right after, the talent wars eased, resulting in lower attrition levels.
Now, Wipro saw its 12-month attrition rate rise for the second quarter in a row to 15.3%, higher than the 14.5% recorded in the September quarter. This was among the worst in the industry, topped only by L&T Technology Services Ltd. which saw an attrition of 15.8%, up from the preceding quarter's 14.3%.
HCLTechnologies Ltd.'s trailing 12 months' attrition increased to 13.2% in the December quarter versus last quarter's 12.9%. Chief Executive Officer and Managing Director C Vijayakumar told analysts that the attrition was slightly higher compared to the previous quarter as a "natural consequence of the demand pickup."
Amid the high attrition, some companies managed to add to their headcount. Infosys added 5,591 employees, while HCLTechnologies saw a net addition of 2,134. The Mumbai-based LTIMindtree saw an addition of 2,362 employees. However, TCS, Wipro and Tech Mahindra reported headcount reductions of 5,270, 1,157 and 3,785 employees, respectively.
TCS CEO K Krithivasan, in a post-earnings call with analysts, had indicated that there might be no direct link between a company's growth and headcount addition. "On a long-term basis, there will be some correlation between the headcount and growth. On a quarter-on-quarter basis, it will be difficult to have that correlation," he said.
Commenting on Wipro's headcount loss, Saurabh Govil, the company's chief human resources officer, had said, "The dip in headcount is dependent on demand and productivity; as we look into the coming quarter, this will be ironed out as it was a seasonal effect."
LTIMindtree had also said that it was working on growing its employee bench strength to prepare for growth ahead as IT spends pick up.
In the coming week, investors will be looking out for the quarterly updates from Coforge Ltd., Persistent Systems Ltd. and Mphasis Ltd. to gauge how the overall people metrics of the IT services industry look like.
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