BackAttrition rate in India surged to 20.3% in 2022 from 6% in 2020: Check driving factors here
A latest survey by global professional services firm Aon Plc has revealed that the first half of 2022 saw an attrition rate of 20.3% in India, a significant increase after the two year Covid pandemic induced lockdown
PremiumLatest survey by global professional services firm Aon Plc has revealed that the first half of 2022 saw an attrition rate of 20.3% in India, a significant increase after the two year Covid pandemic induced lockdown. The attrition rate brings back the debate of great resignation that industries across the world faced.
The phrase ‘great resignation’ broke the internet for the past year since the job market started opening globally in the post-pandemic era. The past 18 months saw technology companies witness severe employee departure even as companies attempted to return to normal after the pandemic.
The survey also shows that across industries salaries in India are expected to increase by 10.4 percent in 2023, compared to an actual increase of 10.6 percent to date in 2022, which is slightly higher than the 9.9 percent increase projected in February.
The attrition rate in India across industries in 2022 was only marginally lower than the one faced in 2021, thereby indicating a massive pressure on companies for retaining employees. The survey also revealed that trend is expected to continue for the next half of the year.
What is attrition rate?
What is the attrition rate? The attrition rate is the pace at which people leave a company. Essentially, the attrition rate measures how many people leave, voluntarily or involuntarily. It's usually expressed as a percentage and used as one of the main figures HR tracks to understand how things are going at a company.
India affected by Great resignation
Even as increased employee attrition refuses to die down, the world economy has begun to slow since Russia invaded Ukraine earlier this year.
The recruitment agency Michael Page predicted that India is likely to witness an 86% employee attrition for 2022. This survey also suggested that in India, an estimated amount of 60% employees were ready to take up lower salary to achieve a better work-life balance.
"With the clear majority saying a significant talent migration event is upon us in the next few months, we must be ready for it to increase," the report stated. Notably, the survey had also suggested that the percentage of employees planning to quit their current jobs was the maximum in India, followed by Indonesia, Philippines and Malaysia.
Reports have suggested that the Great Resignation occurred owing to career progression, change career role or industry, unhappy with salary, unhappy with strategy or direction of company.
Factors contributing to higher attrition in India
The survey by Aon Plc has chalked out the attrition drivers that is leading to employees in India partake in the Great Resignation.
Here's taking a look at the attrition drivers-
External inequity of compensation- Employee attrition owing to external inequity compensation reduced from pre-covid to post-covid times.
Internal inequity of compensation-Employee attrition owing to internal inequity compensation reduced significantly from pre-covid to post-covid times.
Limited growth opportunities-Employee attrition owing to limited growth opportunities increased from pre-covid to post-covid times.
Nature of work-Employee attrition owing to nature of work reduced from pre-covid to post-covid times.
Increasing rate of employee attrition from 2021 to 2022 was attributed to hostile managers or the work environment. Employees also quit working in firms to pursue higher education. This number reduced in 2022 than in 2021.
Further employees were also found quitting owing to the lack of job security in their respective firms. This also saw a reduced rate in 2022 as opposed to 2021. Notably employees quitting in search of better work-life balance increased in 2022 than it was in 2021.
Employee attrition in India based on sectors
The top sectors that lost the most number of employees voluntarily or involuntarily includes
-E-commerce-28.7%
-Professional services- 25.7%
-Financial institutions-24.8%
-Hi-Tech/ Information Technology-21.5%
-IT Enabled Services-21.4%
The sectors that lost the least number of employees from pre-covid times to post-covid times include
-Engineering Services-14.0%
-Chemicals-12.9%
-Automotive or Vehicle Manufacturing -12.4%
-Engineering Manufacturing-11.7%
-Metals and Mining- 8.6%
Salary impact of employee attrition
The latest survey by Aons PLC found that four out of the five sectors that are expected to have the highest projected salary increase are technology related and experience the highest volatility and impact of current global economic uncertainty.
Increased salary comes as a combative effort to minimise employee attrition that in turn also goes on to project a significant effect on the economic uncertainty of a country coming out of a pandemic and caught in the midst of an ongoing war between Russia and Ukraine.
With an expected salary increase of 12.8 percent, e-commerce leads sectors with the highest projected increase, followed by start-ups at 12.7 percent, hi-tech/information technology and information technology-enabled services at 11.3 percent, and financial institutions at 10.7 percent.
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