Attrition Rates: Foot Soldiers Of Private Indian Banks Hopping Posts More Frequently

Indian private banks are having an increasingly hard time retaining their young employees.

Across functions like sales, call centres and telemarketing, this cohort of workers are the foot soldiers for banks. They sell loans, gather deposits and manage client relationships, but given the attrition trends among private banks, they don't seem too keen to stick around.

Aggressive sales targets, limited immediate growth potential, inappropriate workplace behaviour—which recently came to the fore—and long work hours are all contributing to the attrition seen among younger employees, according to two junior bankers and a senior private banker. They spoke with BQ Prime on the condition of anonymity, as they aren't authorised to speak with the media. 

For instance, while getting promoted at a global bank takes about two to three years, it stretches to four or five years at Indian banks which serves as a deterrent for young employees, the first of the two junior bankers quoted above said.

Jobs in call centres also tend to be gruelling since most people who call or receive these calls aren't typically patient or polite, the senior private banker mentioned above said. So, it's understandable that some people wish to leave after a year or two, this person said.

The bouquet of push factors coming from private banks is reflected in the attrition rates seen at banks. 

For India's largest private bank, HDFC Bank Ltd., the overall employee attrition rate has jumped to 34.15% in FY23 from 27.6% in FY22. The attrition rate among non-supervisory staff—which includes sales officers—was even higher at 39%, according to HDFC Bank's FY23 annual report.

"We are cognisant that the experience of working with HDFC Bank can be better on several counts, especially culture," Sashidhar Jagdishan, chief executive officer at HDFC Bank, wrote in his annual shareholder letter for FY23. 

Similarly, Kotak Mahindra Bank Ltd. saw a total of 14,175 exits in FY23 from employees under the age of 30, denoting an attrition rate of 58.2% of all such employees.

Kotak Mahindra Bank's overall attrition rate among junior employees stood at 50.7% in FY23, up from 43% in FY22 and 32% in FY21, according to the bank's annual report.

"At the senior management level, (attrition) is less than 10%. At the middle management level, it's less than 20%. It's only in the junior management, which is really at about 50%. This is largely in sales, service, and call centers ... some amount in collections," Shanti Ekambaram, whole-time director at Kotak Mahindra Bank, told analysts in a post-earnings conference call on July 22.

For other banks like Axis Bank Ltd. and Yes Bank Ltd. as well, overall employee attrition rates were elevated in FY23 and stood at 34.8% and 42.7%, respectively, according to their respective annual reports.

"All of us in the industry are seeing attrition in the 30-35% range," Amitabh Chaudhry, managing director and chief executive officer at Axis Bank, told reporters in a post-earnings conference call on Wednesday. While at some level, banks are used to working with this kind of attrition, the spike seen last year by Axis Bank has slowed down this year, he said.

"As the banking and finance industry continues to undergo technological advancements, the demand for qualified experts is expected to rise steadily over the next several quarters," Sashi Kumar, head of sales at job-listing site Indeed, said.

Demand-Supply Gap

"At an industry level, there is a strong demand-supply gap which continues," Ekambaram said, during the analyst call.

When demand for talent exceeds supply, two things typically happen: the organisation that has employees starts expecting higher productivity from them and the employees realise that they have more opportunities in the market, Rituparna Chakraborty, co-founder of job portal TeamLease, said.

This need for higher productivity increases pressure on employees and can also make it more likely for them to jump ship if the right opportunity appears.

But young bankers quitting jobs at private banks don't also necessarily leave the sector, Chakraborty said. Young employees typically take a merry-go-round of jobs with different banks, with few actually leaving the sector, the private banker said.

But by placing the onus for attrition on the current generation of employees, senior bank management is being absolved of any responsibility, Hemindra Hazari, an independent banking analyst, said.

Irrespective of the reasons, such elevated attrition also imposes costs on a bank. Consistently hiring new employees, training them and paying for their recruitment process are all an expenditure burden, which can become pressure points. "It is wasteful expenditure and points to a failure of banks' human resource departments," Hazari said.

While considering a move from an Indian bank to another, one typically only looks at the compensation, but with international banks, the work profile can be a lot more enriching as well, the former private banker said.

For the other junior private banker, their job currently entails travelling around Mumbai's bank branches each day in search of prospective clients. Building relationships with branch managers, cajoling customers and commuting all day is not something this person was keen to do, but for now, they are doing it.

The idea would be finishing a year at the bank and then looking out—maybe for a marketing-focused role or some startup with better pay and less commute, the junior private banker said.

In this person's case, the push factors are present and the pull is perhaps what they're waiting for. And therein lies the challenge for banks as well.

In an industry with a demand-supply gap for young talent, endearing a bank to an employee could very well involve a structural rethink that accommodates both work culture and work function upgrades. In the absence of which, it's only natural that young talent will peep out of glass-lined windows.