Skill shortage still haunting IT firms

Bengaluru: Shortage for high-tech talent in the Indian IT industry is not going to be bridged in the near-term on the back of possibility of higher offshoring. Demand for niche skillsets in the technology startups, especially in defencetech and healthtech space, is supplementing this trend.

"The shortage of engineering talent is not going to be subsided in the near term. Though many fresh engineering graduates are coming out every year, the demand for niche talent remains high. The ongoing Ukriane conflict is likely to increase offshoring towards India. Also, government's aggressive focus on defence technology startups is driving the demand for high-skilled engineering talent," said a Bengaluru-based HR expert who works with multiple large IT services companies. Reports suggest that around 50,000 jobs may be outsourced to India temporarily due to the ongoing Ukraine conflict.

Currently, shortage of high-skilled engineering talent continues to be a challenge for many engineering services companies who not only hire engineering graduates, but also hire people holding masters and above degrees in various science streams. But due to lack of adequate collaboration with Indian universities along with dearth of R&D projects, availability of such talent remains tight.

Moreover, Indian startups working on core technology areas like defence, space, and healthcare among others are making the competition intense for such high-skilled talent base as they usually offer higher compensation apart from incentives.

Meanwhile, analysts have noted that despite the entry of higher number of fresh engineering graduates, employee attrition numbers for Indian IT firms are not likely to fall sharply in the January-March quarter.

"The attrition across companies would continue to be high. Hence, cost to backfill attrition (at higher costs) and costs related to retention, bonus, rationalization of compensations, is expected to put pressure on margins," ICICI Securities wrote in a note. For the quarter ended December 2021, most of the big IT services companies including Infosys, Wipro & HCL Technologies had reported around 20 per cent attrition level. Things were similar for most mid-tier IT services and engineering services companies.

Also, HR experts have raised fears that as work from office resumes for many software services companies, many employees are not keen to come back to offices. This is likely to raise attrition in the coming quarters as options for working from remote location also rise in the market. "Hiring and attrition related commentary in the current quarter will be keenly watched," wrote ICICI Securities. Indian IT firms will kickstart the earnings season with Tata Consultancy Services (TCS) announcing its results on April 11.