Employees are leaving the workforce in India to escape role stagnation, inadequate compensation and unhealthy environment.
The attrition rate of India in only the first half of 2022 is 20 percent according to the latest survey by Aon PLC; a global professional services firm. The percentage has been increasing since the two years of the pandemic.
Fahad Yezdani who is currently working as a business manager in an architecture company says, “The reason companies are facing high attrition rate might be because there are a lot of mergers happening, or the company eliminates the whole department to stop duplication of work.” He further said, “it is also because employees are leaving voluntarily.”
Attrition is the departure of employees from a company and the reasons could be voluntary, involuntary, death, or retirement. The reason behind the high attrition rate in India is both voluntary and involuntary according to a study by the International Journal of Human Resource Management and Research (IJHRMR)on attrition rate and retention practices in India.
An interior designing company where Fahad worked in the past removed employees for cost reduction. “My company had to remove 200 employees from the payroll and asked them to be freelancers,” he said.
People often think that layoffs are benefiting the company. However, it is not the case. Sayani, a Human Resource Manager at Grand Asansol Company said, “My company went through 15 to 20 percent attrition and after that it had to invest a lot of resources in order to recruit new employees. The company remained less profitable.”
The study showed that attrition has a lasting impact on the firm. It also stated that high attrition reflects on the company’s failure to manage human resources and leads to loss of productivity causing the remaining people to leave.
Top-tier companies like Tata Consultancy Services (TCS) had an attrition rate of 17.4percent and Wipro had 23.8 percent in 2021. Bengaluru, being the Information Technology (IT) hub of India has the highest attrition rate among other metropolitan cities at 29.7 percent according to the Analytics India Attrition Study 2022. However, it is not only the Information Technology sector.
IT sector, professional services, e-commerce, hospitality, and financial institutions are the top five sectors affected by high attrition rates. Chemicals, aerospace, engineering, manufacturing, cement, metals, and mining are among the bottom five sectors affected by high attrition rates.
The Aon PLC report shows that out of 20 percent attrition, 15.4 is voluntary and 4.2 percent is involuntary. The top reasons for voluntary attrition as per the report are external inequity of compensation, limited growth opportunities, role stagnation, and internal inequity of compensation.
Fahad said that many voluntarily quit jobs in his company. “In my company, I have seen people quit jobs to start their ventures or to get out of the unhealthy environment. Some of them had better offers,” he added.
Rishabh (name changed) quit his job voluntarily to pursue further education. “I had a decent job as an editorial assistant but I wanted to gain further knowledge. A better degree would have allowed me to be able to apply to big companies and get better exposure. So, I decided to quit my job,” he said.
Anik, a Senior Software Developer at Labvantage Solutions (an IT company) says his company has a very low attrition rate. “My company fosters a pleasant work environment, gives employees creative freedom and offers them fair compensation and benefits. This is the reason why my company has very low voluntary attrition rate.”
FAQs
Lack of growth opportunities, inadequate compensation, job recognition programmes, workplace culture and poor work-life balance were the top five reasons for attrition, according to human resource consulting firm Omam Consultant's salary projection survey 2024, shared exclusively with ET.
What is the attrition rate for Indian companies? ›
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.
What is the attrition trend in India in 2024? ›
Moderate attrition will persist across industries in 2024, she says. “Software and internet vertical at 12.1% tops the chart, owing to the continued demand for digital expertise to drive transformation plans. This is closely followed by the gaming (12%) and BFSI (11.9%) industries.” 1.
Why is attrition rate so high? ›
One of the most common reasons for employee attrition is a lack of career advancement opportunities. When employees feel that their career progress is stagnant and there are no opportunities for growth, they feel disheartened and start looking for other positions elsewhere.
What is the main cause of attrition? ›
Your employees may leave for a better job, relocate to a new country or city with family, or a new area that makes commuting to your office difficult, management issues, job dissatisfaction, toxic organizational culture, or lack of learning opportunities.
What happens if attrition rate increases? ›
Generally, high attrition rates or churn rates indicate that employees are turning over pretty quickly while low attrition rates mean that people are staying with your company for a longer period of time. Employee attrition rates will also vary based on the size of your company.
Which Big 4 has the highest attrition rate? ›
Attrition is almost same in all the Big4s as all of their work model is almost same. It is like a wheel and people move with in the Big 4s from one company to other company wherever they get additional benefits. It is like a TIt for Tat, if Deloitte take people from PwC, next year Pwc take people from EY or KPMG.
Which company has the highest attrition rate? ›
The metric used to measure the loss of employees over time is called the attrition rate. In the first quarter of the fiscal year 2022-23, Infosys' attrition rate was 28.4%, the highest among Indian IT giants. Tech Mahindra's attrition rate was around 22%, while Wipro came in second with a rate of 23.3%.
What is the formula of attrition rate in India? ›
To summarize, the attrition rate formula is: Attrition rate = (No. of separations / Avg. No. of employees) x 100.
Which industry will boom in 2025 in India? ›
India expects to have 1 billion internet users by 2025 and the e-commerce market is projected to grow by 18 per cent annually through 2025. The govt also expects the country to have the 2nd largest online-shopper's base globally by 2030 with around 200-300 million shoppers.
India's tech talent landscape in 2024 is marked by innovation, adaptation, and collaboration. Startups and Global Capability Centers (GCCs) are driving demand for skilled professionals. Key skills include Data Science, Cloud Computing, Cybersecurity, AI/ML, Gen AI, and RPA.
What is the attrition rate of GCC in India? ›
Xpheno data show that with 16-18% average attrition, GCCs in FY24 had a gross talent demand for over 250,000 people. "As a reflection of the uncertainties and slow recovery in the West and global markets, GCCs have kept a cautious capacity growth trajectory in FY2024," said Kedar Pathak, GCC specialist, Xpheno.
Why is the attrition rate high in IT industry in India? ›
Current Attrition Rate
One of the main reasons for such a high attrition rate is because of the job market. There are many IT companies in India, and they all have many job openings simultaneously offering competitive pay. Hence, the competition for jobs is very high, and people have started switching more frequently.
What is the root cause of high attrition rate? ›
Several factors can cause high turnover rates, including employees feeling overworked, companies failing to offer adequate professional advancement opportunities and businesses offering insufficient pay or benefits to employees.
Which bank has the highest attrition rate in India? ›
HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Yes Bank, and IndusInd Bank, there was an average attrition rate of 35-40% during the financial year 2022-23 (FY23). HDFC Bank reported 34.15% attrition, Kotak Mahindra Bank 46%, Axis Bank nearly 35%, Yes Bank 43%, ICICI Bank 30.9%, and IndusInd Bank approximately 51%.
Why TCS has less attrition? ›
TCS is very keen when it comes to training employees and offers courses to the employees to level up. On attending the training sessions, 22% of professionals attend training more than 6 times in a year. 29% have done training 3-5 times in a year whereas 33% have done 1-2 times in a year.
Who is responsible for attrition? ›
Supervisor or Line Manager as a cause of attrition:
A large majority of HR professionals polled that immediate managers are a bigger reason for attrition.
What is the attrition rate for TCS? ›
TCS employee attrition: Tata Consultancy Services (TCS) has reported a drop in attrition rate to 12.5 per cent in its fourth quarter on April 12, 2024. The company's workforce stood at 601,546 till March 31, 2024.
What is the formula for attrition in India? ›
To summarize, the attrition rate formula is: Attrition rate = (No. of separations / Avg. No. of employees) x 100.
