Even as the attrition rate remains high, IT major Infosys is raising salaries and net hiring may also be increased which might impact the firm’s near-term margins. The company believes that it will bring down the attrition rate, which rose to 28.4 per cent during the June 2022 quarter as compared with 27.7 per cent in the previous quarter.
Infosys’ total employee count at the end of the June 2022 quarter stood at 3,35,186, adding 21,171 employees during the first quarter of 2022-23. Its attrition for IT services during the June 2022 quarter rose to 28.4 per cent on the last 12 months basis, against 27.7 per cent a quarter ago.
Its Chief Financial Officer Nilanjan Roy said, “We are fueling the strong growth momentum with strategic investments in talent through hiring and competitive compensation revisions. While this will impact margins in the immediate term, it is expected to reduce attrition levels and position us well for future growth. We continue to optimize various cost levers to drive efficiency in operations.”
He also said the continued high focus on cash led to strong FCF (free cash flow) to net profit conversion at 95.2 per cent and improvement in ROE (return on investment) to 31 per cent.
Aditi Patil, research associate at Prabhudas Lilladher, said, “BIT margin came at 20 per cent, a decline of 160 bps quarter-on-quarter (Ple: 20.7 per cent, Cons: 21 per cent). LTM IT services attrition increased to 28.4 per cent, 70 bps q-o-q. Strong net-headcount addition of 21,171, 6.7 per cent q-o-q. EBIT (earnings before interest and tax) margin guidance band is retained at 21-23 per cent for FY23. Management expects margins to be near the lower end of guidance.”
Apart from Infosys, other major IT companies, including India’s largest IT services company Tata Consultancy Services (TCS), HCL Tech and Wipro, are also taking steps to retain talent at the company.
TCS reported an attrition rate of 19.7 per cent on a last twelve-month basis for the June 2022 quarter. It was the highest attrition rate registered by the company in the past six quarters. The attrition rate came in at 17.4 per cent in the quarter ending March 2022. Wipro’s attrition rate stood high at 23.3 per cent in Q1FY23, which was meanwhile lower on a quarter-on-quarter basis. Wipro had posted a 23.8 per cent attrition rate in Q4FY22, which is the previous quarter.
Wipro CEO and MD Thierry Delaporte has said, “Our talent investments I believe are paying off. To recall, we announced moving to a quarterly promotion cycle which is very new, from when we were on the yearly cycle. The quarterly promotions have been effective this month (July 2022) and also salary increases for those eligible in September 2022.” He added that the company’s attrition has continued to moderate from the previous three consecutive quarters.
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