HCL Tech monitoring crisis in Sri Lanka daily, sees no work disruption: CHRO Apparao

HCL Tech CHRO Apparao VV

HCL Technologies, which has about 1,700 employees in troubled Sri Lanka, has set up a team to monitor the situation as the island nation grapples with food and fuel shortages amid record inflation and an economic crisis. While there has been no work disruption so far, it is preparing for all scenarios, with backup plans ready to move work and people to India.

Apart from Sri Lanka, Costa Rica, and Poland, HCL Tech is stepping up hiring in smaller Indian cities such as Madurai, Lucknow, and Nagpur as it looks toward fresher pools of talent amid booming demand for software services and rising attrition.

In an interview with Moneycontrol, VV Apparao, chief human resource officer of HCL Tech, explains the company’s efforts in augmenting the talent supply chain and steps it is taking to counter the challenges of hiring and attrition. Edited excerpts:

In Q4, HCL Tech reported attrition on the last 12-month basis jumped to 21.9 percent from 19.8 percent. When do you see attrition moderating?

We are already witnessing attrition moderating. In the last two quarters, attrition is at the same level – we are seeing it plateauing and marginally reducing. We do believe it will stay at these levels.

We believe that since the demand environment is still very robust and there are not enough supply channels out there, there is a gap in the market. So unless the supply channels increase, it’s very unlikely that attrition will go down to the earlier levels of 10 percent to 15 percent.

Also Read: Demand continues to be robust despite unpredictable times: HCL Tech chairperson Roshni Nadar Malhotra

Are there specific measures you’re taking to counter the attrition spike?

We have taken three steps in augmenting our talent supply chain. We have new centres established in tier-two and tier-three cities. We started this six years back with the concept of taking people back to their roots. Today, they are quite scaled. Within centres at Madurai, Lucknow, and Nagpur, we have 20,000 people working. Last year, we added 30 percent, and this year again we are targeting another 30 percent of people to be added.

Globally also, we have increased the number of centres in the last three-four years. We are now present in Poland, Bulgaria, Hungary, Romania, Lithuania, Mexico, Guatemala, Brazil, and Costa Rica. Similarly, in Asia-Pacific, we added Sri Lanka and Vietnam. So all these are actually at taking off level, they’ve got a critical mass of 1,000 to 2,000 people. We are there scaling up.

We added 23,000 freshers last year, we are planning to increase it significantly this year. And as part of that, we have conducted an experiment with standard 12 students. We are training them for nine months in the classroom and then three months on-the-job training. These trained individuals are then deployed, when they can parallelly continue their education with institutes like BITS Pilani, and IIM Nagpur where we offer five-year integrated MBA programmes.

At the end of their degree, they have experience of four to five years under engineering. We started small because we wanted to perfect the art of training, deploying, and ensuring that customer deliverables happen. Now, we are scaling it up. We started with 80, and last year, we took 4,000. This year we are planning to double down on that and train 8,000. This programme gives us stability because while they work with us and complete their education, we get at least six years of stability.

What are the challenges that the company faces while strengthening its workforce in terms of offer shopping and offer rejection?

Definitely, as a part of the industry, we are facing challenges. Earlier, people taking offers and not joining used to be around 25 percent or so. It has gone up to 40 percent now because the demand environment is so high. If people get a job, they resign and then they’re in the market before they join their new work.

And within the 90 days’ notice, they will collect another two or three offers because the market is so hot. But then, you can join only at one place. They will negotiate, take the best offer and join that. So the rejection percentage has gone up for everyone and I’m thankful that we are probably 10 percent or 15 percent lower than others, but we are facing the same problems.

What impact will inflation have on wages?

The company is witnessing wage inflation as it continues to recruit new talent. The increase in hiring comes as we want to keep growing in the face of robust demand, which is also the reason why our margins have taken a hit. But will it sustain? I don't think it will.

Every passing day, you're onboarding more and more people at the bottom of the pyramid and they will start gaining experience. So once they form a part of the experienced pool, which will happen after one year, you have many more people who are available in the market.

So these mad increases of 40 percent, 50 percent, 100 percent – those scenarios will reduce and normalcy will definitely come. But I think in the short term, it’s inevitable because of the supply chain problem and gaps that are there. Wages will be higher.

HCL Tech started operations in Sri Lanka two years ago. With Sri Lanka in turmoil, how are you tracking and responding to the situation?

I’m monitoring the crisis in Sri Lanka on a daily basis. We have a crisis management team that takes stock of the situation. We have a total population of around 1,700 employees in the country, out of which about 110 are Indian... Apart from those 110, we took visas for 250 Sri Lankans as well. In case there is a serious disruption, the deliverables will happen from India.

Largely, there are three problems in Sri Lanka that we continue to face – one is a disruption in terms of diesel causing issues of power backup, the second is inflation, and the third is political instability.

However, there is no disruption to work, thankfully, at this point in time. The employees are working from home like in India. With Indian intervention, the 13-hour power cuts earlier, even in places like Colombo, have now come down to two, two and a half hours. If there is a power problem, we have two offices there which can run continuously for 30 days with the diesel backup.

We have also implemented a formula through which people’s salaries get adjusted to inflation and for expats, the depreciation of the Sri Lankan rupee is also accounted for. So financially, there is no issue for people as we are adjusting to these parameters.

However, if we have disruption, we will invoke business continuity and bring the necessary people to India. Currently, the Indian teams are helping them, but if this continues, scaling up will probably become an issue.

Talking about India, has the company started calling people back to the office after the government started easing down on restrictions?

Again, there are three parameters that govern such decisions. Number one, if there is a regulation, then we have to follow it. For example, we have already got notices from Maharashtra, Tamil Nadu, Andhra Pradesh, and Karnataka governments saying that people must come back to the office because we are working from SEZs (special economic zones). So, if they don't give relaxation to us, we have no choice.

Secondly, assuming that the government gives relaxation but a particular customer wants the team to work from the office only because of data privacy or infrastructure availability reasons, then again we have no choice.

The third aspect is dependency on labs. For example, within engineering and R&D services, there is a huge dependency on labs. Those people, in any case, are coming to office. We currently have 12 to 15 percent working from offices.
We give flexibility to teams on work-from-home kind of roles. We don’t mind them working permanently from home. In the long term, we are pivoting towards a virtual hybrid model. That is the direction and policy.