Layoffs at startups: Breather for IT firms on attrition front

Talent Crunch

- Large Indian IT firms witnessing over 20% attrition rate

- Rising demand for technology talent

- Infosys's attrition at 27.7%

- Wipro has 23.8%

- Startups reducing headcount

- Vedantu fired over 400 employees

- Unacademy sacked 1,000 staffers

- Trell laid off 300 employees

- Meesho fired 150 staffers

Bengaluru: Indian IT services companies are likely to find some respite from high attrition as many domestic startups have started to lay off employees in the wake-up tightening fund-raising environment.

HR managers and industry watchers said that mid-twenty employee attrition rate seen by many large IT firms is expected to come down in the next two quarters.

"Mid-twenty attrition of IT companies will definitely come down. Attrition above 20 per cent is a sustainable model in the IT industry. In the next two quarters, it will come down," Siva Prasad Nanduri, V-P & Business Head of IT Staffing at TeamLease Digital, told Bizz Buzz.

Large Indian IT firms has been witnessing more than 20 per cent employee attrition rate amid high demand for technology talent. While attrition rate of Infosys stood at 27.7 per cent in the January-March period of FY22, it was at 23.8 per cent for Wipro.

Many HR managers are of the opinion that digital talents are being aggressively chased by startups with higher salary and other perks. This is one of the major reasons behind rising attrition rates in the domestic IT industry.

"If demand for talent comes down from domestic startup ecosystem, it will cool down employee churn happening in the technology industry as a whole. Employees will also be cautious in taking a jump to any startup if the firing of employees continues as seen in some of these new age companies," said a Bengaluru-based HR manager.

He, however, added that demand for digital talent as of now remains very strong. Many startups have started firing their employees as the fund raising environment deteriorates in the country. Vedantu has fired more than 400 employees this week, making it the second instance to take such employee optimisation measure. While Unacademy has fired around 1,000 staffers, Trell has laid off about 300 employees in the recent past. Ecommerce startup Meesho has fired about 150 staffers in recent months apart from some other startups.

Meanwhile, wage cost of employees is likely to come down in coming quarters as supply situation improves as far as technology talent is concerned. "We see some rationalisation of expectations as far as salary hikes are concerned from engineers in the recent time. Companies are also not aggressively chasing candidates as they used to do earlier," Aditya Narayan Mishra, Director, and CEO of CIEL HR Services, said.

Mid-twenty attrition of IT companies will definitely come down. Attrition above 20% is a sustainable model in the IT industry. In the next two quarters, it will come down

- Siva Prasad Nanduri, V-P & Business Head of IT Staffing at TeamLease Digital