IT industry logged 25% attrition rate in FY22
The information technology (IT) industry in India recorded an employee attrition rate of an unprecedented 25.2% for the full fiscal year FY22. A recent report by Teamlease has highlighted that the IT industry would continue to lose valuable employees to other industries. The report has also highlighted that the total rate of attrition in the contract staffing industry would be stable at around 50% in FY23; like in FY22. In short, the big challenge for the IT industry is how to reduce the big talent migration that is happening out of IT. Once a magnet for the best talents, the situation appears to be changing drastically.
What has changed is that there is a sudden surge in demand for technology people in the non-tech industries as most such companies gravitate towards higher levels of digital adoption. The report estimates that Tech talent in non-tech companies will see 3X growth in the coming years. That would leave nearly 1 million new tech jobs by 2025. This is likely to trigger a major shift to non-IT companies. While the non-IT companies are now able to pay top dollar to attract the best of IT talent, the IT companies are being constrained by their existing cost structures and high levels of fixed commitments.
The good news for the IT industry is that it is growing. However, the bad news is that it is becoming difficult to retain talent. Incidentally, the survey highlights that 57% of IT professionals will not consider returning to IT services sector in the future. That means, the outflows are gone and unlikely to come back. IT industry is still likely to double head count in five years but now employees prioritise factors like company culture, leadership, quality of life work environment etc. The employers have to now go much beyond compensation and take a more holistic picture of the needs of the professionals.
Some of the findings of the survey were quite interesting, although it is a tough call whether it is really actionable. As many as 60% of respondents were of the view that workplace flexibility could make them stay with a company. However, this continues to be a very open ended topic. Nearly 50% of respondents had the firm view that employers should provide opportunities for career development. Again, that is easier said than done. As many as 27% of the employees wanted employers to focus on company culture to retain their employees. In a sense, this could be a temporary phase when demand exceeds supply and could be gone, as rapidly as it came to haunt the IT industry.
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