Demand for digital skills drives up attrition in IT sector

Sectors like financial services, fast-moving consumer durables and power and energy have only moderate intent to hire, with financial services at 36%, Fast Moving Consumer Durables at 35% and power & energy at 33%.

As more companies vie for top resources to spearhead their digital transformation journeys, there’s a strong demand for talent with new-age technology skills. With a large number of lucrative jobs up for grabs, attrition was up in the information technology (IT) sector in the quarter ended June 30, 2021.

The attrition rate in the IT sector was the highest among all industries in India at 8.03% in the April-June 2021 period, followed by educational services at 7.45% and knowledge process outsourcing at 7.38%, according to the employment outlook report of TeamLease Services.

Interestingly, IT is the only sector where attrition rates have risen appreciably. The other growing sectors like e-commerce and technology start-ups, healthcare and pharmaceuticals, telecommunications, FMCG and manufacturing, engineering and infrastructure saw a minimal increase in attrition.

Rituparna Chakraborty, co-founder and executive vice president, TeamLease Services told FE that these sectors have proven to be Covid-19 proof with regards to job creation or rather have been direct or indirect beneficiaries of the pandemic. While the business outlook for all these sectors remains bullish, the supply shortage of talent with required skills is leading to fatter paycheques. “There is a fight, a literal talent war that is going on out there and clearly anybody is willing to offer more for those who would leave and take those opportunities up, which is the reason that the attrition is high,” she said.

Given that there are little signs of this scenario changing anytime soon, the attrition levels will continue, however, whether they inch up from here is guesswork at present, Chakraborty said. To be sure, India’s largest software services exporter, Tata Consultancy Services reported 140 basis points to rise in attrition levels during the April-June 2021 period at 8.6%. US-based technology firm Cognizant, which has two-thirds of its employees in India reported a record high attrition of 31% this quarter, of which 29% was voluntary. To make up for it, the company has said it will hire 1,00,000 experienced hands this year. Other IT majors—Infosys, Wipro, and HCL Tech — also reported high attrition rates at 13.9%, 15.5%, and 11.8%, respectively, in the June quarter.

However, what should be worrying is that sectors other than IT are not seeing many job creation opportunities. “There is a marginal improvement across all sectors, but it is still marginal. The job market is largely tech, e-commerce, and healthcare driven,” Chakraborty said. Sectors like financial services, fast-moving consumer durables and power and energy have only moderate intent to hire, with financial services at 36%, Fast Moving Consumer Durables at 35% and power & energy at 33%.

According to the report, though the growth percentage is not as high as the previous quarter the intent to hire is positive. There is a 4-percentage point rise in the intent to hire in the July-September 2021 quarter compared to the recently ended June quarter. It has moved from 34% in April- June 2021 to 38% for July- September 2021.

In terms of the job level, the intent to hire is the highest at the junior level at 32% in the July-September quarter, followed by entry-level at 28%, which have seen a growth of 4 percentage points and 7 percentage points, respectively. However, the intent to hire at the senior level is at 26%, which is a drop of 2 percentage points versus June ended quarter and the least intent is at the mid-level at 22%, seeing a drop of 4 percentage points sequentially.

“The focus of industries on profiles that are at the execution level is an indication that businesses have got their strategy as well as plan in place and this trend of positive momentum is here to stay. Further, the festive season is around the corner and most of the sectors would want to put the season to maximum use and this is also a reflection of why there is a significant rise in demand for freshers and junior talent,” Chakraborty said.