Why Infosys Is Stopping Ex-Employees From Working With TCS, Accenture, Wipro, IBM, Cognizant?

An overheated job market in the software and BPO space has activated a surge in attrition rates at TCS and Infosys, which are the top two IT companies in India by revenue. So, tech companies are falling back on unconventional and unethical tactics in an effort to retain talent.

Workers union seeking intervention against clause

A workers union representing the employees of the IT and BPO sector has said that Bengaluru-based Infosys is enforcing a clause in the employee contract to prevent workers from joining some of its rivals. The union has written to the Ministry of Labour as well as Employment and the Ministry of Corporate Affairs, seeking intervention in the matter.

The rival companies named in the employees’ contracts are TCS, Accenture, IBM, Cognizant and Wipro for Infosys’ software services wing. For the business processing management (BPM) wing, the named rivals in the employees’ contracts are Tech Mahindra, Genpact, WNS, TCS, Accenture, IBM, Cognizant, Wipro and HCL.

Rise in attrition rates

This comes amidst increasing attrition in the segment. For the March-quarter, Tata Consultancy Services reported the  annual attrition rate of 17.4%, which is a huge increase from 7.2 per cent in the same quarter last year. Infosys reported the annual voluntary attrition rate of 27.7% during January-March period, as compared to the 10.9% in January-March 2021. Other top IT companies have not declared their fourth quarter and full-year 2021-22 results as of yet.

“This clause has been there for quite some time. There are a lot of job opportunities in the market because of which the attrition rate is very high. Companies were even matching offers received by their employees from rivals to retain talent. But in the last few weeks, I have received around 65-70 complaints, where Infosys is enforcing this (non-compete) clause,” Harpreet Singh Saluja, president of Pune-based IT employees union NITES, said to The Indian Express.

TCS’s attrition rate expected to flatline

India’s largest IT services company, TCS, has also stated that its attrition rate is expected to flatline and then taper over the next two quarters. As of March 31, Infosys has 3.14 lakh total employees, while TCS has 5.92 lakh employees.