India’s $195 billion IT industry is increasingly making its presence felt around the world. In FY22, its revenue grew $30 billion to reach the $227 billion mark. The industry recorded impressive growth of 15.5%. And, according to Nasscom, it was the highest since 2011.
The industry also added the highest number of new hires of 450,000 in FY22, bringing the number of employees to 5 million.
But, even as it recruited a record number of new talent, the industry was besieged by a record attrition rate.
Just look at the computer indicators. At Infosys, year-over-year churn rate hit an all-time high of 27.7% in the fourth quarter of FY22. Meanwhile, India’s largest IT services company, Tata Consultancy Services, reported record attrition in the March quarter at 17.4%.
And IT companies are stretched thin, doing their best to retain talent. Some have resorted to new ways to keep employees on board.
According to reports, the companies paid wages well above prevailing market rates. Some even gave 100% hikes. Employee stock options were also offered to software engineers. Fintech company BharatPe offered BMW bikes to new entrants.
The technicians, who have a few years under their belt, now receive multiple job offers.
Some IT companies, fintechs and even startups have started delaying employee performance bonus payments in an effort to delay their departure. Apparently, this gives the company more time to find a replacement.
But why this turnover?
Experts believe that the demand for digital talent has exceeded the supply. The pandemic has also caused an acceleration in digital adoption. It has also contributed to the intense race for talent, not only from IT giants, both global and domestic, but also from more nimble start-ups.
But some experts also believe that this turnover cannot continue indefinitely and that things will calm down as soon as possible.
However, the skill sets that were central to the race for talent will still be needed by all aspiring techs who want to succeed.
According to the TeamLease Digital Employment Outlook report, released last December, the IT-BPM industry had set its sights on digital skills in FY22. And, among them, 13 skill sets were going to be in high demand. In fact, they were expected to grow 7.5% in FY22 compared to FY21.
Moreover, according to the same report, the gap between supply and demand is widening for skills in data engineering, data science, machine learning and artificial intelligence.
Recreate the table from the attached image. (PLEASE DO NOT USE THE IMAGE ITSELF)
Expert in talent management solutions and IT staffing, Business Standard, also highlighted these skill sets.
However, the IT industry – and indeed most businesses – is on the cusp of significant change, the effects of which are not yet fully understood.
Obviously, technicians will have to religiously adhere to skill enhancement. But what about the industry? Ultimately, a company can either develop talent or buy it. But, if churn doesn’t subside in the coming year, might it be time for the industry to consider a third option? They may also seek to borrow, so to speak, talent by hiring companies that offer temporary staffing solutions.
There will indeed be a dearth of digital talent in the market that can keep pace with technology. Take for example the potential of the metaverse, and the skills it will require. With 5G becoming the norm in the coming years, the Internet of Things will also take off in a big way. The situation is dynamic, so it is difficult to predict whether the same skills that are in such demand today will still be among the best five years from now. They will undoubtedly remain relevant, but will they still have the premium they do today? Only time will tell.