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IT’s top-4 see exodus of 10,000 employees in Q1

IT’s top-4 see exodus of 10,000 employees in Q1
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First Published: Mon, Jul 23 2007. 04 21 PM IST
Updated: Mon, Jul 23 2007. 04 21 PM IST
New Delhi: Indian IT companies, grappling with an appreciating rupee eating into their profits, are also finding it hard to retain employees with the top-four firms — TCS, Infosys, Wipro and Satyam — seeing an exodus of about 10,000 people in the first quarter.
Although, all the four firms collectively hired more than 25,000 employees in the April-June period, the net addition was just about 16,300 — taking their total headcount to 285,357 employees.
Except for Satyam Computers, attrition rate went higher at Infosys, Tata Consultancy Service and Wipro from both the previous quarter as well as the year-ago period.
All the four companies reported an adverse impact of rupee rise on their profitability and margins, and are looking at various hedging measures, which include improving employee utilisation rates.
However, analysts believe the high attrition rates, mostly triggered by employees seeking higher salaries, could adversely impact the companies’ plans to improve utilisation rates.
TCS, the biggest in terms of revenue as well as headcount, saw an exodus of about 2,500 employees, while just over 2,000 people quit the country’s second largest software exporter, Infosys.
The employee loss is estimated to be much higher at about 3,500 at Wipro, the country’s third-biggest IT firm, while Satyam, the smallest of the four, saw the lowest number — about 1,600 people — leaving.
Interestingly, April-June quarter is the period when most software firms implement annual wage hikes and see a sharp surge in new hirings.
TCS had net employee additions of 5,512, followed by Wipro (4,319), Infosys (3,730), and Satyam (2,716) in the quarter.
TCS reported an attrition rate of 11.5%, up from 10.6% a year ago and 11.3% in the previous quarter, while it stood at 13.7% for Infosys, unchanged from the previous quarter but higher than 11.9% in the April-June period last year.
Satyam saw its attrition rate falling to 14.9% from 15.7% in the January-March period this year and 19.2% in the year-ago period, where as Wipro saw a sharp surge to 20% from 17% in the previous quarter and 15% in the year-ago quarter.
Wipro says its high attrition rate was driven by various factors such as seasonality, a spike in the number of employees going for higher studies during the quarter, and the company’s practise of implementing annual wage hikes in the third quarter.
The annual hikes are fully reflected in first quarter results of Infosys and TCS, while some of the other front line IT firms do the same either in the second quarter or spread it over a number of quarters.
“This year, in particular, we have seen a spike in the percentage of people who have gone for higher studies, which is not very uncommon to see in quarter one, because all admissions open up around this time,” Wipro corporate vice-president (human resource), Pratik Kumar, told analysts in a conference call to discuss the company’s quarterly results.
However, Wipro expects a decline in attrition going forward as the company has decided to advance annual wage hikes to August, while it does not expect people leaving for higher education to be a factor.
“We have been effecting our offshore salary increases in the beginning of third quarter, unlike some of the industry peers who do it at the start of the financial year. This used to expose us and, to an extent, we used to be vulnerable on that count,” Kumar added.
Infosys’ director-human resources, Mohandas Pai, said the exodus has somewhat stabilized at the company in the past year, after considering the 1.5% involuntary attrition at the fresher level.
Pai said this accounted for people who joined at the fresher level but did not complete the training after failing the qualifying test.
“Second quarter of last year we had 2,040 people leave us, third quarter 2,040 and the fourth quarter it came down to 1,640 because of seasonalities. And this quarter it is 2,010,” Pai said at a conference call on 11 July after announcing the company’s first quarter results.
Wipro also recorded 1.4% of forced attrition rate in the quarter. In the year-ago quarter, almost 2 percentage points of attrition was due to voluntary separation.
The company said this was partly due to a clean-up exercise on the issue of fake resumes, while some people left after being put in lower quartile performance on completion of annual appraisal cycles in the previous quarter.
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First Published: Mon, Jul 23 2007. 04 21 PM IST