Remote work is fuelling global IT’s unsustainably sky-high attrition rates

It seems like only yesterday that IT services company — with the possible exception of Accenture — went from a stubborn, apprehensive child, unable and unwilling to undergo that crucial business model transformation in order to survive, to finally embracing it.

Ultimately, as difficult as it was to relinquish the gravy train that was application development and infrastructure maintenance-IT bread-and-butter for decades, IT majors have seemingly come around to realising that the cloud and digital is going to be their future.

Companies from Infosys to TCS, Cognizant and Wipro, and even mid-tier firms like Tech Mahindra or HCL, all seemed to have finally begun putting more and more of their focus and resources into architecting digital solutions along with design consulting chops.

The pandemic simply added jet-fuel to this trend. As people hunkered down at home, ordering necessities and overdosing on zoom calls, digital dependency sky rocketed, and the related need for agile, flexible solutions became more urgent.

Businesses scrambled to try and upgrade and innovate their online presence to cater to this overnight explosion of customer activity and IT firms began doing the same in tandem, with its work force at home, to keep their lights on.

A war of attrition

Yet, just when the existential crisis linked to abandoning a lucrative old model and migrating to an ambiguous, new one has abated, another far more serious one has cropped up from the ashes of the pandemic: Attrition.

Attrition rates for IT companies with their back-ends in India — which is most of the world, regardless of country of origin — have hit between 20% to 30% which means you are theoretically replacing your entire work force, as Mint newspaper points out, every three-and-a-half years or so.

Infosys, for instance, experienced an attrition rate shift from 10.9% in the quarter ending in March last year to 27.7% in March-end this year. Similarly, TCS went from a 7.2% attrition rate last March to 17.4% this year.

Things have gotten so bad that Infosys, for one, has insisted on a non-compete clause that prevents jumping ship to a competitor or a customer for a period of six months and a year respectively.

How did things get this far? Fact is, even before the pandemic there was increasing difficulty in finding skilled tech talent, especially in the new fast-moving and fast-growing areas of digital.
The pandemic-induced explosion of digital solutions just made everything worse.

It also inspired a profound realisation to many about the historical overemphasis of an office-centric existence and the promise of a more balanced, healthier life.

During much of that period, numerous polls show that employees hardly slacked off — in fact they worked harder than ever — and paradoxically, their productivity, happiness, and job satisfaction rates were higher than ever before.

The ability to work from home and care for one’s families seemed to suggest a radical new way of thinking about work, and most importantly, living. But can it realistically become a model for the future of work? And is it really beneficial for everyone?

Staying home

In this new, post-pandemic era, going back to the office full-time is a horrifying prospect for a big chunk of the workers who are looking to switch jobs or get back into the workforce. Bargaining for maximum work-from-home days per week has become de rigeur.

Since most businesses today are tech-fuelled in increasingly significant ways from digital storefronts to supply chain infrastructure and more, they could see a significant in-house impact.

For IT majors, it could be catastrophic, considering there already was a major talent war going on in technology before the pandemic hit.

Plus, new and exciting frontiers of technology, like virtual reality applications or Web3, whose backbone is blockchain technologies, provide alluring draws to skilled engineers hunting for new challenges who are willing to frequently jump ship for them.

As Forbes points out, Microsoft could do nothing about its augmented reality team taking flight to work on Meta’s metaverse.

To add to these woes, India is going through a huge startup boom that is sucking up a lot of the talent that would have once migrated to IT but are loathed to now considering the number of billionaires the ecosystem is creating every month.

So what does this mean for talent and employers?

Right now, with the paucity of talent across the board, tech workers are in the drivers seat and could command hefty concessions. But that may turn out to be a pyrrhic victory.

At the end of the day, as industry expert Phil Fersht, founder of research outfit HFS points out, talent looking to max out work-from-home privileges can keep leap frogging to their hearts content.

However, there will come a time, when a lot of these functionalities could eventually be replaced by increasingly sophisticated automation, something that will also pare employee costs. Which means, constantly having to upskill in order to remain relevant.

The working-from-home cohort will also prevent themselves from constantly and organically learning from and sharing with colleagues in the office.

These are things that are proving to be crucial when coming up with relentlessly innovative design thinking solutions along with a team-oriented execution that is becoming par for the course to win prized contracts and the associated high-margin consulting business.

Zoom meetings may never be able to replace the benefits of physically huddling together in a room and dreaming up or hammering out solutions or popping into offices to bounce off ideas.

In the short term, however, the pressure is on IT majors to convince employers to return to the office. Servicing global clients, as Fersht has pointed out, is simply not possible with a third of your work force constantly switching jobs.

This is a reality that should also perturb the tech worker of today and tomorrow who has become used to the comforts of the home office.

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