As the tech industry faced a global downturn and employees hunkered down to hold on to their jobs, the biggest drop in attrition has been in the IT/ITeS sector, where employee turnover fell to 15.5% in 2023 from 21.3% in 2022, according to the Deloitte attrition survey shared exclusively with ET.
Attrition numbers dipped across sectors barring financial services where it rose to 32.7% in 2023 compared to 29.2% in 2022.
Employee turnover slowed down to 18.1% (18.4% in 2022) in consumer products, 19.4% (20.5%) in life sciences, 18% (19.3%) in services, and 11% (13.5%) in manufacturing.
“Attrition is always positively correlated with business growth… When companies grow, the demand for talent grows, and within the defined talent market, it translates into attrition,” Anandorup Ghose, partner, Deloitte India told ET.
“With demand for technology talent coming down on account of both a slowdown in customer markets (for IT services companies) of North America / Europe as well as lesser funding available for early-stage companies, the need to hire more people has declined and, with it, the large attrition numbers,” he said.Core sectors and core skill attrition was not significant ever and at this point has seen a marginal decline but not as sharp as technology-related sectors, Ghose said.HR heads and industry experts say lower attrition levels are likely to continue in the first half of the new year.
“The entire job market has slowed down; industry has slowed down. During the Great Resignation, all roles were in great demand, now companies are hiring mostly for niche skills. Employees are staying where they are instead of job-hopping and this will continue for some time as the environment continues to be uncertain,” said Sangeeta Gupta, senior vice president of IT industry body Nasscom.
“A lot of tech folks were moving to startups – and opportunities there have declined as well,” she said. People are being cautious, because they don’t know what lies ahead. This will continue for some time – everyone is expecting a change only by mid-2024.”
Hiring across sectors including tech and professional services has cooled off along with the fall in attrition. Appraisals are also likely to be more stringent: rewarding top performers with in-demand skills with higher differentiation.
“Where employees were juggling multiple job offers from early 2021 to mid-2022, now opportunities are far fewer,” said the HR head of an ITeS firm who requested not to be identified.
Despite the drop in attrition numbers across industries, attrition for key talent continues to be a challenge for companies, ranging around 1.5X to 1.7X of total attrition, the Deloitte survey, covering a total of 160 companies, showed.
This is in line with an underlying phenomenon over the past few years where specific kinds of skills/functional areas and technology related skills, etc have seen the largest share of attrition.
“High performers and those with specific skill sets will always be in demand,” Deloitte’s Ghosh said.
“In frothy markets these individuals tend to get more significant hikes when they change jobs – in situations like as they are today, the hikes are less aggressive and hence some of them may choose not to move,” he said. “However, the point remains that even when overall attrition dips, key talent attrition numbers don’t go down as fast.”