top of page

The Attrition Conundrum

"With great power comes great...." Sorry, that's just me getting carried away. What I mean to say is, "With great industry growth comes great employee attrition".

Anecdotal evidence from a senior leader at one of India's bigger IT services companies suggests that employee attrition in their organisation, and in the larger IT industry as of late 2021, is as high as 35%. Yet another IT major has recently publicly attributed a current annual attrition rate of 33% in their own organisation.

It stands to reason, doesn't it? The top 10 Indian IT companies together employ well over 3 million employees. Furthermore, they seem to be flush with new projects won from around the world, and are so desperate to hire new employees to fulfil their obligations to their new clients that they are having to bribe prospective employees with generous, even excessive, pay rises.

Other insiders from long-established companies in the IT domain tell us that while India is churning out lakhs of graduate computer engineers each year, the industry is struggling to hire fresh, young talent from within that pool. As a result, though the numbers are there in supply terms, there are fewer talented professionals available than there is a demand for, making it a buyer's market - resulting in both salary inflation and high attrition rates.

Job hoppers are making hay while the proverbial sun shines, but they will do well to remember that what they are in the middle of is, in all probability, an unsustainable bubble.

Individuals with average to high talent seem to have multiple offers in hand at any point in time, allowing them to negotiate hard for one unreasonable salary hike after another. Companies, on the other hand, are putting in huge effort to hire individuals only to learn that a handful of them join while others have already moved on to another firm prepared to offer an even higher salary.

High employee attrition is bad for business.

The immediate cost of hiring a new employee is bad enough. Worse is the cost of retraining the new employee on the company and the client(s) when the previous employee in that position had only recent been trained for the same things. What is unmeasurable is the opportunity cost of not having the necessary position filled bang in the middle of high-value, time-critical projects.

There seems to be a sense of resigned acceptance of the status quo in the industry; a feeling that these are the signs of the times and we just need to find our way around the issue. Encore Mindseek's recruitment division is seeing the effects first hand, on a daily basis.

Many in the industry are probably turning a blind eye to the total cost of this trend on their organisations. After all, why worry when this additional cost is made up for by the value of new contracts coming in?

Everyone seems to agree that employee retention and loyalty, even in these fast-paced times, is about more than just the salary you pay them. So, as a senior executive in the IT industry, what are you doing to stem the rot? How 'clued in' are you to what employees are looking for, what they are moving jobs for, and indeed what will make them stay? How well do you understand the culture in your own organisation?

How are you managing workflow, deadlines, and client expectations when you are so very busy hiring new employees and training them on current projects?

Wouldn't it be best, most efficient, and definitely most cost effective, to hire once and retain the employee for a longer time - perhaps years, perhaps decades, perhaps for the entirety of their working lives?

Yes, of course! Call me out for stating the bleeding obvious.

Let me say it again: high employee attrition is bad for business!

So, what are you doing to help yourself and your organisation retain talent? All organisations are affected. Of course they are. But companies with better work cultures and better work environments typically do better than the rest. Have you thought about how an improvement of even a few percentage points in your company's employee retention rate can benefit it, operationally and financially?

If it feels like you are out of answers, or if you would simply like to do a better job of it, why not hire a professional agency to review your HR systems and processes and give you an unbiased, outside perspective on what you can do differently?


bottom of page