The top four Indian IT companies – TCS, Infosys, Wipro and HCL Tech – have doubled their hiring targets for 2021-22 to 1.6 lakh freshers, as demand surpasses supply with enterprises accelerating their digital transformation journey on the back of the pandemic and a rising attrition.
The top four companies hired some 82,000 freshers in FY21 and added 53,964 employees in the quarter ending September 2021, up from 17,076 recruits in the same period last year.
This hiring frenzy is driven by multiple factors. In the wake of the pandemic, enterprises globally accelerated their digital transformation journey as the world moved into the new normal. This means that technology is not just about driving cost-efficiency through automation, but also about driving businesses.
For instance, the aviation and hospitality sectors, which were among the worst-hit by the pandemic, will have to invest in contactless check-in facilities after restrictions are lifted. Retailers can no longer be in purely offline business and are investing in digital capabilities to drive business.
Rajesh Gopinathan, Chief Executive Officer and Managing Director, said, in the earnings call last week that this strong demand environment was “once-in-a-decade opportunity”.
All these have translated into increased business opportunities for IT companies, who are looking at double-digit growth for FY22. However, this means that demand is far outstripping supply, with companies fighting for the limited talent pool with skills such as cloud architecture, cybersecurity, full stack development and AI/ML expertise.
Attrition, fresher hiring
This war for tech talents has also resulted in an increased attrition across the companies, which is a key concern, considering the strong demand environment.
TCS’ attrition rate increased from 8.6 percent in the first quarter this year to 11.9 percent in the second quarter. Wipro and Infosys reported over 20 percent in attrition and HCL Tech at 15.7 percent. For the previous quarter, the attrition stood at 10-15 percent for the three IT companies.
Thierry Delaporte, CEO and MD, Wipro, said during the earnings call on October 13: “One of the issues that we must do even as we build talent at scale is attrition.”
To contain attrition and to address the supply side challenges, companies are increasing fresher hiring. “We have doubled down on our fresher intake, which was about 8,100 young colleagues joining us from campus in Q2. We continue to aggressively build on this and I’m happy to share that we are well positioned to add over 25,000 freshers in the next financial year,” he added.
The top four IT firms have further increased their fresher hiring targets for the year to address this challenge. For instance, TCS will be hiring 78,000 freshers for the year in total, up from 40,000 it had initially planned. Between April and September, TCS has on-boarded 43,000 freshers and will add an additional 35,000 in the next two quarters.
Milind Lakkad, chief human resources officer, said during the earnings call on October 8 that the attrition might continue for the next two-three quarters. Wipro and Infosys have increased their hiring targets to 17,000 and 45,000, respectively, for FY22. HCL Tech will hire 22,000 freshers and made a record addition of 11,135 employees in the second quarter ending September.
Saurabh Govil, chief human resources officer, Wipro, said during the earnings call on October 13, “Supply side constraints will not impact our growth, which is a priority for us. If you see, this is the second quarter where at the company level we’ve added more than 10,000 people as a net headcount due to the higher attrition environment. We will continue to look at both freshers and laterals as our strategy. We added 2X freshers this year, and we will further increase it by another 3x in FY23.”
Incentives, stock options
In addition to stepping up fresher hiring, IT firms are also looking at additional incentives to retain and attract quality talent.
Wipro and HCL Tech employees’ salary hike came into effect on July 1, 2021. TCS has rolled out salary hikes for its employees effective April 1, 2021. UB Pravin Rao, COO, Infosys, during the recent earnings call pointed out that the company is looking at several measures such as compensation intervention and career growth opportunities for employees to retain talent.
The HCL Tech Board approved Restricted Stock Unit (RSU) grants as part of the compensation mix, as it looks to retain high performers amid the war for talent. This is a part of the company’s long-term incentive plan.
Under this model, which was approved by the board on October 14, the company will move from 100 percent cash awards to a mix of 70 percent cash and 30 percent RSUs for the grants, which will be offered in the later year subject to shareholder approval.
In addition, the company also rolled out wage hikes – 7-8 percent for offshore employees and 3.5 percent for onsite hires – that came into effect for junior employees on July 1, and for senior executives, from October 1. The junior management will also be getting a 100 percent quarterly bonus for the quarter.Internet Explorer Channel Network