Covid impact: Attrition for top 3 IT firms dip significantly in Q1

TE Raja Simhan Chennai | Updated on July 21, 2020

Covid impact: The low attrition levels are likely to persist for another two or three quarters or even decline further.

TCS, Wipro, Infosys see heavy decline in attrition as employees are gripped by ‘fear factor’

There is a silver lining for IT companies in these ‘pandemic’ times in terms of attrition. In the first quarter of the current fiscal (the period when the Covid-19 impact was most felt), the top three IT companies — Tata Consultancy Services, Infosys and Wipro — have reported a significant decline in attrition numbers.

In the current situation employees, it appears, prefer to be in the same company rather than jumping to another.


‘Fear factor’

“Due to the fear factor, some employees have declined lucrative offers and are even willing to take a pay cut to stay in the same company,” said an official of a recruitment firm. IT companies have turned their focus on improving employee utilisation and re-skilling talent, he added.

In TCS, during the June 2020 quarter, the attrition level declined to 11.15 per cent (LTM — last 12 months) — the lowest in nearly two years, and may remain subdued in the foreseeable future, said a report by Emkay Global Financial Services.

Infosys saw the steepest decline in attrition at 11.7 per cent in the June 2020 quarter as against 15.3 per cent in the preceding quarter and 20.2 per cent in the corresponding quarter last year.

Similarly, Wipro’s attrition dropped to 10.7 per cent in the June 2020 quarter as against 14.7 per cent in the March 2020 quarter and 17.9 per cent in the June 2019 quarter, according to company data.

The low attrition levels are likely to persist for another two or three quarters or even decline further, said Sanjeev Hota, Head of Research, Sharekhan by BNP Paribas. Companies would prefer to utilise their internal talents for incremental works and employees would also hesitate to change jobs in these uncertain times, he added. However, involuntary attrition may increase due to tighter performance management systems.

V Ramakrishnan, Chief Financial Officer, TCS, told analysts, “Our heavy focus on organic talent development initiatives has resulted in ‘any time, any place learning’ becoming part of the popular culture. Learning intensity grew sharply in Q1, registering a 24 per cent increase over the prior quarter, despite the absence of fresher onboarding during this period.”

Voluntary attrition for IT services, which is a key monitor, declined to 11.7 per cent compared to 20.2 per cent in the first quarter last year, and significantly lower than the comfort band of 14-15 per cent, said Pravin Rao, Chief Operating Officer, Infosys.

“We don’t have any structured plan to let go of people or anything. We always have a strong focus on performance and wherever people are not delivering, we let them go. And this happens periodically once a year for some set of people and every six months for other sets of people,” Rao told analysts on voluntary attrition, which the company has started disclosing from the June quarter.

“We managed to utilise our people very well. We really had a look at our variable workforce. We looked at using utilisation and improving – you have seen offshore rates improving,” said Jatin Dalal, Chief Financial Officer, Wipro.

“We were able to leverage a lot of internal talent,” he added.

Published on July 20, 2020

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