[GTO]

The Nutgraf (an excellent newsletter from The-Ken.com) shared the following in my inbox. I was quite astounded reading it.

I love their sheer achievement & volumes, but are they not losing sleep over 25% attrition? What kind of a culture is there for freshers? What kind of quality of work would they be doing? What kind of message is this sending out?

Revenues and profits are fantastic. Infosys’ net profit is up 12% year-on-year. HCL Technologies’ net profit was up by 23.9% (adjusted for the impact of a deferred tax credit and one-time milestone bonus in the previous year). TCS was also up by 7.4%, and Wipro by 3.9%.

Employee attrition is at an all-time high. Infosys lost 27% of its employees last quarter. TCS is also above 25%. HCL Tech is up to nearly 22%. Wipro is at nearly 24%.

India’s biggest IT service companies are making more money than they have in the past. Great revenues. Even better earnings.

But for some strange reason, they lose nearly a quarter of their employees every single quarter.

The newsletter talks about starting salaries being the same since a decade! It's as if time stood still, with no inflation:

Back in 2010, the average salary for a fresher at a top-tier IT company was around Rs 3-3.5 lakh (~US$4,300-5,000 at that time).

In 2021, the average salary for a fresher at a top-tier IT company is around… Rs. 3-3.5 lakh (~US$4,000-4,500).

Industry executives say there is a good reason for fresher salaries in the IT services industry barely rising over a decade: there is more supply than demand.

Close to 10-15 lakh engineers graduate every year in India, and a significant portion are not employable. As a Noida-based IT executive pointed out, “Why would we pay more money when there is ample supply and we are investing in training them? Salary is a function of demand and supply.”

Then, there is contract labour of a different kind:

If you are an IT company and you don’t want freshers who are getting paid next to nothing to leave, what do you do? Well, you make them pay you a penalty if they leave your company.

Take TCS, for example, which mandates all freshers sign a contract that if they leave the company within two years (now recently reduced to one year), they’d have to pay the company Rs 50,000 (US$650)—nearly a fifth of their annual salary. On top of this, TCS has a notice period of three months. So, if you want to leave the company, you’ll have to pay them AND wait for three months. This applies to all scenarios, even if you get admission into a university and want to quit to pursue higher education.

There is a cartel...there has been a cartel, there is no doubt. They (big IT companies) talk to each other, sometimes tell each other not to increase, that's been there for a long time.

I know that people (of big IT companies) used to get together and tell each other not to raise (entry-level) salary. If one took into effect inflation, the remuneration of freshers in the IT industry has in fact come down by 50 per cent in the last seven years. That's why attrition in the first five years is very high.

They (big IT companies) can afford to pay better salary. They have to make sure they don't pay more at the top, and they pay more at the bottom. They have to learn to adjust.

To me, it's an ethical, fairness issue; they can afford to pay more. (Not raising an entry-level salary is) ethically and morally wrong.

[Durango Dude]

Serves them right! They dish out 'paltry' increments that even the maid or man servant won't accept. That's bound to happen. My son worked for TCS for almost a decade and there was no increment or promotion so he went to another company. All these companies are used to only satisfying the investors and not employees. They treat employees as slaves.

[denzdm]

To arrest this attrition, Infosys came up with a weird discriminatory clause which bans it's employees from working for the competitors for six months after they quit the company.

A strong reaction was seen as an union reportedly filed a complaint seeking to remove this non-compete clause.

The clause includes the following companies in their competitor list — Accenture, TCS, IBM, Cognizant, and Wipro.

So, they believe, if you cannot retain them, cut off the places they would go.

Source - https://www.businessinsider.in/caree...w/90954483.cms

[dragonfire]

Am serving notice period at one of the big four and I recently hired my replacement for the project - a subcon at thrice of what they are paying me.

If they eventually hire him full time, they still would have to pay him twice as me. Yet they don't want to match the 50% hike I am getting at my new job. Go figure!

[poloman]

There is nothing new in this report. The attrition rate in these companies have always been very high. But close to 30% attrition and still company making good money shows the kind of work and work culture these companies have.

These companies any way don't attract top talent and the only lure for employees is off shore work assignments. So employees get frustrated fast and leave the company.

But to be fair, the attrition rate now is high even in product companies. My team had almost 0 attrition in 2019 and 2020. Now it is close to 10%.

Also there are signs that party is over. There is a huge tech meltdown happening. Most FAANG companies are down 30-70% of value. Everything will be back to normal soon.

[whitewing]

The attrition is not limited to the Desi companies, been the same with other global companies like Accenture as well. They don't treat the employee any better (although the pay may be higher).

[libranof1987]

25% is what they publish. The real figure is 40+ %.

The last two years have been unbelievably contrasting. While the pandemic has brought havoc on most sectors, anything related to IT seems to be going ballistic. MOST organisations (both product and service-oriented) are seeing crazy levels of attrition (25-40% is common) and hikes for new joiners (again, anything from 30 - 200%). If you have a niche skill, esp. related to coding, play your cards well, and you could easily double/triple your salary in a couple of years. (Of course, it is more common for those <10 years of experience).

The real problem with attrition: the cream and even the layer beneath get better jobs elsewhere and move on. And rust and residue (which isn't conducive for the organisation anyway) gets left behind, because they couldn't find a better (or any) job outside. But just because they stayed, they often get promotions/hikes.

[Turbohead]

Honestly, these companies have lost it completely. These companies run for the sole purpose of maintaining share prices and nothing else. All decisions are made on this factor alone. Nothing else matters. Not even long term gains.

In the pursuit of immediate results-

1) MBAs are hired as managers and sales managers. They mostly lack any knowledge about the tools, complexity, turn around time for the products/services they are selling and make huge promises all in the hope of getting some random client which can create revenue and profits. Can't blame em. There is nothing to be gained from upskilling in tech when their primary responsibilities have to deal with business.
2) As a result, WLB is a huge problem with many of the workforce. Resources work day and night, especially freshers, motivated by fake promises such as on site opportunities/ promotions.
3) Crazy hikes in the market motivate most resources to hunt for jobs. If you're going to work day and night for X rupees, why not work the same amount of time for 2X rupees?
4) WFH has resulted in many people working way over time with one simple reason- "You are at home right? What are you doing? Please finish the work ASAP because we have milestones to achieve and payments to be recieved". Reasoning found in point 3 applies here again.
5) Meagre hikes not matching real world inflation is also motivating many people to hunt for new jobs.

These are some of the points that I have noted from experience. All in all , I strongly believe this is a fallout from the crazy expectations of investors for a company to keep growing forever at a high pace. Can I blame the investors? If yes, I have to blame myself! I invest in MF and I expect my funds to grow YoY.

[Jeroen]

Originally Posted by denzdm

To arrest this attrition, Infosys came up with a weird discriminatory clause which bans it's employees from working for the competitors for six months after they quit the company.

Actually, in the west clauses like that are pretty normal. My contract stipulates a year! However, these non compete clauses usually apply to employees in critical roles or have a lot of strategic insight into the company. A lot of sales people get this clause too.

So it is not something that applies to all.

In fact, I have restrictions on working for our customers too.

Not sure in India, but in the west and certainly in the Netherlands, you can always take your specific case to court. You can’t just slap this on all employees, there has to be some specific individual reason to it. Also, here is the interesting part. If I would be offered a job with a substantially higher salary at a competitor, my employer could stop me from joining them. However, if it came to that, the court is very likely to rule that yes, I can’t join a competitor for a year, but my employer would have to cough up the new salary and pay that higher salary for that same period.

But back on topic, 25% attrition is an awful lot! How can you maintain the appropriate level of experience and competence.

But where do all these people go to, is everybody switching within the industry?

jeroen

[Black_Star]

This kind of report is disheartening but also something that I expect from the current job market. I am also going to join the job market after completing my MBA in the next 3 months and from what I am hearing Rs 3-4 lakh should be my salary expectation.

TBH its a dog eats dog world out there and these companies are taking advantage of this. This kind of culture does not foster company loyalty, but in the job market in India this is to be expected.

[raksrules]

Originally Posted by Durango Dude

TCS...

I personally think that for someone young and who just started their career, TCS is not really a good option. It is not only due to less fresher pay but the fact that TCS will not rehire someone whose has left for other companies. Many people who are 15+ years experienced, I feel choose TCS as at this point in their career they can get decent package in TCS and in most cases they stop looking outside after this point as getting even an interview call at higher experience in IT is difficult. I am someone who just joined TCS but then I am 17+ years experienced. I know how difficult it was for me to even score an interview and on looking at 3 months notice, most recruiters would never call back. I don't work in some niche technology either.

Originally Posted by denzdm

To arrest this attrition, Infosys came up with a weird discriminatory clause which bans it's employees from working for the competitors for six months after they quit the company.

I think this clause always existed but it was that one cannot work for same client in a competing organization from what I know. I don't think Infosys can stop someone from joining say TCS and the employee works in some totally different client.

Originally Posted by dragonfire

AYet they don't want to match the 50% hike I am getting at my new job

I think they do it purposely. Because if they do for someone, others will start resigning and then ask for matching of salary. My previous org did match (sort of) for one or two people and looking at that some others put papers but since those people weren't really someone who we cannot do without, their resignation was approved and no negotiation was done. They were free to leave.

Originally Posted by libranof1987

25% is what they publish. The real figure is 40+ %.

Of course, it is more common for those <10 years of experience.

I am not sure but attrition is calculated like this...

Total Strength: 100
People left: 40 (so people remaining = 60)
People hired: 20

So now the attrition is 100 - 60 (remaining) - 20 (hired) = 20%

So even if they lost more people, since they hired people too, they factor that and give the number. I may be wrong though.

About the <10 years, I know that experience level has made a killing in the covid times. 100-150% hikes. I am 17 years experienced and even I changed jobs during this time but got 30% hike (my last job change was 2.5 years back before covid with 66% hike over my first job's salary). So I kind of expected this hike. And with my experience level and not really niche technology, it is difficult to land interviews anyways.

[Venky03]

Originally Posted by Turbohead

Honestly, these companies have lost it completely.

Totally agree with all the points, there is 0 innovation (Tax Portal fiasco still fresh) and while all these companies want to safeguard their own interests with bonds, there is nothing to protect the employees. While the demand and supply argument is valid, companies are definitely making more money than they did a decade ago and are blocking off employees from having a piece of that pie.

What is more disturbing is the fact that this toxic culture has been normalized : working overtime, unrealistic time frames, miniscule pay, no Indian holidays and the list goes on. Employees do leave with frustration but the same cycle repeats after another fresher joins in and this won't end until the freshers straight up deny signing these ridiculous contracts.

This problem has its roots in our education system, there is a huge gap between what is being taught in colleges and what is required in the industry.

[Turbohead]

Originally Posted by Venky03

This problem has its roots in our education system, there is a huge gap between what is being taught in colleges and what is required in the industry.

Along with that, these IT companies provide the highest packages for freshers who don't belong to CS background. Plus the general lack of opportunities have left no choice but to sign up for these jobs.

The youth of our country, often termed as it's greatest strength, is left to rot thanks to the stagnating economic growth.

[Samurai]

Originally Posted by raksrules

I am not sure but attrition is calculated like this...

Total Strength: 100
People left: 40 (so people remaining = 60)
People hired: 20

So now the attrition is 100 - 60 (remaining) - 20 (hired) = 20%

So even if they lost more people, since they hired people too, they factor that and give the number. I may be wrong though.

With your calculation, if 20 people out of 100 left, and 30 were newly hired, attrition will be -10%. That can't be.

Attrition rate = Total employees who left/Average number employees in the quarter or year.

Say in a quarter, the employee count was 100 70 100 for 3 months. Average employee count is 270/3 = 90. About 30 people left and 30 people were hired.

Attrition(%) = 30/90 = 33%

FC Kohli, the founder of TCS and the father of Indian IT industry had this favorite quote: I can run TCS just using trainees.

Ok, it was a slight exaggeration, but not by much. The business model of IT services company is mainly fueled by <5 years experienced staff. After that they don't need you that much. That is why they hire trainees every year by boat loads, to replace those who are continuously leaving. It is a well oiled machinery perfected over many decades.

[V.Narayan]

This thread could become a "those wretched employers" tone where it seems there is only one side to a matter. IT companies are facing a spike in attrition plus no matter what you pay folks quit in short time for someone paying more plus newbees joining the workforce need significant inputs of training {it costs time, effort & money} before they are productive revenue generating employees. As a part of this industry at the Board level in a few companies I disagree the attrition is 40%. What I do concur is that the HR departments act as sourcing agencies rather than see their role as human resource development - here my empathy is with the employee.

Attrition in India isn't just about the employer - it takes two to tango. Employees in India in the IT and financial services sector and other sectors (like aviation & medicine)show lesser value to training, longevity, building an internal network than employees in the West. A 15% increment is the trigger point at which they jump. This over the decades has created a resistance amongst employers too and now both sides don't reward loyalty. But sadly where HR practices go IT companies do a poorer job than an equivalent manufacturing organization.

This last point is the reason they are paid a low salary. I'm sharing the concept not arguing whether Rs 3.60 lakhs is right or wrong - that is for the employer and employee to determine between themselves. I do not know how accurate this figure quoted by Nutgraf is. Certainly I have not seen it in 4 companies - all fairly large. Nutgraf/Ken in my experience go off the deep end where hard well researched facts go. I at least cancelled my subscription after a year because of this and wrote to their editor stating this.