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Attrition falls at top IT firms TCS, Infosys in third quarter

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The attrition rate at the top two software services firms in the country - Tata Consultancy Services and Infosys - declined in the third quarter, as a result of higher variable payouts.

TCS announced third quarter results on Thursday, and reported a 1.3 percent sequential growth in profit to Rs 6,531 crore, while Infosys, which reported results on Friday, saw a 37.6 percent sequential increase in profit to Rs 5,129 crore, driven by a tax reversal.

Attrition, or the number of employees leaving a company fell 0.2 percentage points sequentially to 11.1 percent at TCS. For Infosys, the attrition in the December quarter declined to 15.8 percent from 17.2 percent in the September quarter.

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「During the quarter, we provided compensation increases and higher variable payouts to our employees. Our investments in employees continues to deliver results as reflected in lower attrition,」 said Infosys chief operating officer UB Pravin Rao.

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TCS also announced 100 percent of the target variable pay for all its employees.

Infosys reported a net addition of 3,251 employees during the quarter, while TCS reported net addition of 1,667 employees during the quarter.

The third quarter is traditionally slow for Indian IT services companies as they face furloughs and fewer working days in their largest markets - US and Europe - on account of Christmas and end-of-year celebrations.

However, as both companies grapple with the changing dynamics of the IT industry amid slowing growth, rising protectionist sentiment in their core markets, and a slowdown in their largest businesses of banking, financial services and insurance (BFSI) and retail, it will be interesting to see how the coming year pans out for both.

Adding to this is the looming reality of automation, that is seen by several industry watchers as the biggest threat to IT jobs across the world.

Under the previous chief executive Vishal Sikka, Infosys began a series of initiatives to adopt and leverage automation. Infosys also reports a parameter of revenue per employee, which rose to USD 537,000 per employee in the third quarter from USD 527,000 in the second quarter.

As new CEO Salil Parekh takes the helm, it remains to be seen how he will tackle employee issues going forward.

「The perception of TCS vis-a-vis Infosys amongst many analysts is that TCS is a stable, albeit slower and more considered organisation while Infosys is smaller but more risk taking. With the reversal of the tax provision providing the required momentum, it is now up to Infosys to demonstrate that fortune favours the brave,」 said Sanjoy Sen, Doctoral Research Scholar, Aston Business School, UK.

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