TCS CEO expects attrition to drop later this year
Premium- TCS' IT services attrition came at 19.7% on the last twelve months’ basis
While announcing its Q1FY23 earnings, India's biggest IT company Tata Consultancy Services (TCS) said that the company added 14,136 employees for the first quarter of the current financial year, but its attrition continued to inch up to 19.7%. TCS’ workforce stood at 606,331 as on 30 June, 2022.
TCS' IT services attrition in the first quarter of the current fiscal inched up to 19.7% on the last twelve months’ basis. TCS CEO Rajesh Gopinathan attributed the rise in attrition to seasonality, and said the company expects the rate to drop in the second half of the year. “Q1 attrition is a bit of a seasonality as juniors leave for studies. We expect the attrition rate to drop from H2," he said in the press conference after the Q1 results.
He added that the current attrition situation is a transient phenomena as it happened due to a demand spike last year, therefore, he expects it to ease as and when supply and demand balance out.
Attrition rates have been high across IT companies through the last few quarters as demand for technology talent with digital skills continued to outstrip supply with increasing labor costs. With rising demand, attracting talent, training, and retention gained paramount importance.
“We continue to add employees to build for long term growth. Also, we are seeing steady demand from our clients from conversations. As of now, we don't see a softening of demand and also don't see an immediate footprint of recession on our demand," said Gopinathan.
Annualised quarterly attrition has started coming down for the IT sector and analysts had said that any commentary on attrition trend would be keenly watched.
Meanwhile, the IT giant has increased their employees' salary by upto 8%. “Following our annual compensation review, employees received salary increases of 5 to 8%, with top performers getting even bigger hikes. Our empowering, performance-driven work culture is helping us attract local talent across all our key markets," TCS' Chief HR Officer Milind Lakkad said in the earnings release.
Kicking off the earnings season, TCS on Friday reported a 5% increase in its net profit at ₹9,478 crore for the first quarter of the current fiscal, missed analyst estimates on higher expenses, as compared to ₹9,008 crore from the same quarter last where. However, the profit was down 4.5% sequentially from ₹9,926 crore recorded in the previous quarter ending March 2022.