20% IT Employees Will Resign In Next Few Months: Recession Fear Will Impact Attrition Rate?
The staffing firms claim that Attrition rates at information technology (IT) services firms are likely to remain at elevated levels for the near term owing to the fears of recession in key markets such as the US and Europe.
Attrition Rate Remains To Be Higher
Presently, Attrition is at the highest levels, at about 20%.
The director of digital business solutions, professional staffing and international engagement, Adecco, A.R. Ramesh said, “Attrition in the IT sector is estimated to hover around 20% in the near future. The macroeconomic conditions and other key performance indicators will play a large part in deciding the attrition rates and the contribution to the overall last 12 months (LTM),”.
For July-September quarter, Tata Consultancy Services (TCS) reported attrition at 21.5% (LTM) which is up from 19.7% as compared to the first quarter.
TCS’s chief human resources officer Milind Lakkad said, “We believe our quarterly annualized attrition peaked in Q2 and should see it taper down from this point, while compensation expectations of experienced professionals moderate,” on Monday.
Attrition Rate Affecting IT Sector
They have clocked 23.3% and 28.4% attrition rates, respectively, during the first quarter.
Moving ahead, they are most likely to announce their September quarter results on Wednesday and Thursday.
Cost Cutting Due To Recession
It seems that Tech companies were on a hiring spree for almost a year.
While offering high salaries and counter offers, IT companies across sectors digitized their businesses and adopted cloud-based technology.
But now, with the appearance of global economic slowdown and fears of a looming recession, it has applied brakes on and has prompted firms to initiate cost-cutting measures.
The co-founder of Xpheno, Kamal Karanth said, “Attrition rates of IT service bellwethers for the quarter ended September will end as high as the previous quarter, if not higher. While hiring funnels in IT have shrunk and slowed down over Q2, enterprises have honored offers made in Q1 to lateral talent,” which specializes in tech hiring.
Further adding that Attrition will be “largely driven” by exit spillovers from the first quarter since many had to serve a 90-day notice period before leaving a firm.