IT firms double down on fresher hiring as attrition spikes

Rising attrition

While Cognizant’s attrition rate is the highest at 31 percent, it is followed by Infosys, Tech Mahindra and Wipro at 25.5 percent, 24 percent, and 22.7 percent respectively. Going by the executive commentary, higher attrition rate is likely to continue in the coming quarters as well.

Brian Humphries, CEO, Cognizant, said during the earnings call last week, “We are in a robust demand environment… We are certainly in, from my perspective, for an unprecedented competition for talent.” Humphries further added that the company is expecting elevated attrition through the course of the year, and the firm is going to work very hard to try to mitigate that and try to minimise it, the impact on the business.

This is one of the key concerns raised by all the IT firms. Nilanjan Roy, CFO, Infosys, said during the earnings call in January, that, “In terms of attrition, I think it is a larger industry issue. It is not peculiar to us and fundamentally the volume increase for this industry has to come from freshers.”

To combat this, one of the measures all the companies are taking is to increase the fresher hiring.

Fresher hiring

There are multiple advantage to hiring freshers. With the war for talent raging, lateral hires have become not only expensive but also tough to rely on as the dropout rates are high.

Satish Jeyaraman, CEO, Diamondpick, a talent advisory firm, said in an earlier interaction that fresher hiring was a great workforce strategy for the IT firms. “This is because when you hire more at the bottom of the pyramid, train them, deploy them in meaningful engagements, they assimilate well and become quickly productive,” he said.

Jeyaraman explained that companies that hire a lot of freshers, invest in training them and ensure that they are culturally aligned, tend to retain them longer, at least when compared to laterals.

As a result, campuses are buzzing again. Moneycontrol recently reported that campuses across India are seeing record placements not just in metros but also in the smaller cities and towns.

Cognizant plans to hire a record 50,000 people from campuses in 2022. For FY23, HCL Tech will hire 40,000-45,000 freshers, and Wipro 30,000. Tech Mahindra looks to pick up close to 15,000 freshers. TCS and Infosys, however, are yet to share their fresher hiring numbers for FY23.

Apart from top engineering colleges, institutes such as Chandigarh University has beaten its own record in campus placements with 7,412 offers made by 757 multinationals during the pandemic, according to a report, 12 percent more than last year. In addition, the number of companies that are offering Rs 20 lakh per annum have also increased 10 percent for the 2021 batch.

Ramping up tier-2/tier-3 supply

Companies are also ramping up hiring in smaller cities and towns.

CP Gurnani, CEO & MD, Tech Mahindra is expanding its workforce in the tier-2 and tier-3 cities in India.

“Number one is talent availability. It (hiring in tier-2/3 cities) is certainly increasing your supply base. Second, our initial reactions are that this will reduce attrition. My personal opinion is that our opening of Vijayawada, Indore, and strengthening Nagpur, are very positive signs, and the local market as well as the local ecosystem we have created, we are getting the kind of people that we would have normally not got,” he said in an interaction recently.

This also means that companies will need to invest more on training. “My supply base increases, but I still have to do a lot of qualification and training,” Gurnani said. But it also gives opportunity to these kids, who will not be able to leave their homes to go to Bangalore or Pune, because of certain social reasons, or girls who will not be able to leave.

“The moment I increase that supply base, I am able to tap into that talent. And that is what has benefited me by going into these smaller cities,” he said.