IT-BPM industry to add three lakh jobs, witness highest attrition so far in FY2023: Report

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India's IT-BPM headcount will grow from 5.1 million to 5.45 million by March 2023 at 7 percent growth and the contractual headcount will grow from 1.51 lakh to 1.8 lakh which is about 21 percent growth over the last year, according to a report. 

The study by TeamLease Digital highlighted that currently IT services companies, Global Capability Centres (GCC), and product development companies are the top contract staffing consumers, contributing to an excess of 70 percent of this trend. Interestingly, GCC headcount is growing over 10 percent y-o-y.

There are close to 1,500 GCCs in India with a total headcount of over 1.3 million. More than 50 GCCs were set up in FY2021 and FY2022 alone, the Digital Employment Outlook Report said.

In the first quarter January- March, there was a hiring frenzy across the IT sector and that led to an increase in full-time equivalent as well as contract staff hiring.

However, in the second quarter April- June, Sunil C, Chief Operating Officer, TeamLease Digital, said, in the light of the US and Europe slowing down on account of inflationary and technical recession-related challenges, clients switched to contract staffing.

Attrition remains a worry 

Attrition trends continue to worry the contract staffing industry as the report predicts 50 percent to 55 percent attrition for FY2023 when compared to 49 percent in FY2022.

According to the study, increased business and higher numbers of resignations within 90 days continued to contribute to increased attrition. This attrition trend is the highest in the history of the IT-BPM industry in India.

On the other hand, full-time employment attrition continues to be around 24 percent in FY2022. With the attrition trend of the top 300 companies, the Q3 and Q4 FY2022 attrition was 26 percent.

In January-March, Sunil C said the factor of startups hiring and offering equity-based hikes is much higher in comparison to traditional IT companies. However, post the funding winter, this challenge has died out.

“Also, in a growing industry, it’s hard to be at low attrition levels, particularly with more and more opportunities opening up for tech talent in India post the super cycle of digitization tech talent is much required in non-native It companies, as well as most of them, are adopting digital delivery,” he added.

TeamLease Digital expects attrition trends to decrease by at least 2 percent in H1 of FY2023, as full-time attrition wavers in Tier 1 companies across India.

Demand for digital skills to witness an 8.4 percent growth

Based on demand drivers and hiring scenarios in the recent two quarters, TeamLease Digital has identified 15 skills that will lead the way in the India IT-BPM industry in FY-2023.

In general, digitally skilled professionals are paid a notch above the developers working with traditional IT skills. In FY2023, at least 7 out of 10 IT companies will be searching for these digital skills to hire from emerging locations as the demand for digital skills will witness an 8.4 percent growth.

Further, MarTech and IoT are two new additions to the digital skill set this year, with demand for MarTech expected to increase by 5 percent to 7 percent and that of IoT by 4 percent to 6 percent for FY-2023.

Companies will turn to emerging locations for digital talent

With work from home (WFH) avenues increasing and more non-metro locations becoming popular for digital skills, Thiruvananthapuram, Coimbatore, Cochin, Chandigarh and Ahmedabad are building digital skills owing to the strong presence of large Tier 1 player, product companies, GICs, and startups

At least 20 percent of the digital talent employed in Tier 1 cities are currently at emerging locations due to continuing WFH, the report said. In FY-2023, it predicts that companies will turn to emerging locations for the supply of digital talent.

The report estimates that the digital skills population across emerging locations to be in excess of 75,000

Thiruvananthapuram, Ahmedabad, Cochin, Coimbatore, Chandigarh, Indore, Mysore, Vadodara, Madurai, Visakhapatnam, Jaipur, Bhubaneshwar, Mangalore, Lucknow, Nagpur, Goa, Salem, Durgapur, Vijayawada and Trichy are 20 such locations that contribute over 85 percent of the talent from emerging locations across India

Only 3 percent of students land relevant jobs

As of 2021, the report said India annually produces 1.5 million engineering graduates out of which only 3 percent of students land relevant jobs in technical domains.

Further, out of 1.5 million, on an average 33 percent which is 0.5 million are getting hired in software from the Tier-1 and emerging locations. Estimates further suggest that 0.5 million engineering students are emerging from more than 2,500 engineering institutions located across the country.

Among the graduate population in India, graduates from engineering streams contribute most to the digital skills talent pool. The study estimates about 9 lakh engineering graduates as a part of this pool. Non-engineering students are estimated to be about 6 lakh.

The report also observed that 1.5 lakh professionals move to digital-related technologies through a career transition or upskilling.