Industry is in Fix due to attrition

Attrition rate in India surged to 20.3% in 2022 from 6% in 2020. 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 years of Covid pandemic induced lockdown.

While employees seem to prefer the flexibility that will allow them to continue moonlighting, tech giants have started cracking down and even have fired workers caught doing side hustle. With this some companies are expecting the high rate of attrition, and it’ll continue for some time, others say it is slowing down due to expected economic slowdown.There is no uniformity among IT companies in reporting attrition numbers.

Employee attrition is a serious matter. A high attrition rate can be anything over 20% according to industry averages, however, these numbers vary by industry. The past 18 months saw technology companies witness severe employee departure even as companies attempted to return to normal after the pandemic. 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 the trend is expected to continue for the next half of the year.

As per the a 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.

A report from the Financial Times cites research by AuthBrodge states that around 8 to 9 per cent of IT employees in India are engaged in moonlighting. Another survey by Kotak Institutional Equities states that nearly 65 per cent of IT employees know someone who is pursuing part-time opportunities or moonlighting while working a full-time job.

A recent report leaked of Amazon says, it’s attrition costs $8 billion annually. And it gets worse. The documents also indicate potential lapses in the company's learning and development data.

Enterprises across sectors have been not only struggling to manage their expenditures set for hiring, training, upskilling and retention, but they are unable to ensure sensible returns on the investment. It leads the gig economy to grow as a solution to overcome the issue of attrition and uncertain productivity on cost incurred.

Talent today is increasingly shifting to the gig economy as well for the many advantages in presents. Greater flexibility, freedom over work hours, location along with the potential to enhance earnings have been drawing more people towards contractual work.

S Mohini Ratna, Editor, VARINDIA