India witnessing 'great churn' in its labour force

‘I quit’. These dreaded words of workplaces have become the buzzword of the world in the post-pandemic era. A lot many numbers of workers are leaving their jobs in developed economies. Such is the impact that this wave of resignation has got a moniker now as ‘Great Resignation’. As per the US Bureau of Labor Statistics (BLS), an estimated 3% of American workers quit their jobs in September this year. Not only in the US but the phenomenon is also being seen in some developed economies of Europe like Germany & the UK.

While the US and some regions of Europe are reeling under this new labour resurgence, India seems to be relatively immune to this global wave. But the country is witnessing a different kind of labour phenomenon. The employee attrition numbers for some industries, especially in the technology industry, are going through the roof. So, India is seeing great churn in its labour force across many industries with the fading of the Covid pandemic. No doubt a section of workers is also quitting jobs permanently and are joining the burgeoning startup ecosystem, but the percentage of people leaving the workforce forever is minuscule.

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“Great resignation wave is not anyway similar to be like someone is leaving his job and is not coming back to work. There is a section of people who are coming out (of jobs) and are starting something on their own. But, maximum people are resigning from somewhere and joining somewhere else. So, hiring is at an all-time high. Therefore, it is a balance shift (in India),” said Supaul Chanda, vice-president at Experis of Manpower Group.

“There is obviously a lot of crunches in the technology sector and the companies are hiring aggressively. Similarly, startups are hiring like crazy. So, India is not losing talent. Employees are not looking at logos. They are looking at the work they do, and the projects, they execute. In the US, unemployment benefits are very high. That’s why workers can afford to leave the workforce. It’s not the case in India,” he added.

Employee churn in India’s tech industry

In the US, the great resignation wave has been seen among workers in low to middle-earning jobs. The biggest increases in quit rates were in sectors such as leisure and hospitality, where working remotely was seldom an option and wages are typically low. Similarly, within manufacturing, the quit rates are higher among lower-paying non-durable goods segments. According to experts, the factors like burnout at the workplace, shifting of priorities amid the pandemic, low wage, unfair treatment by employers and sound social security protection are driving this trend in the US & European nations.

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In contrast, the rising employee churn in India is mostly limited to well paying, white-collar jobs to a large extent. Record high attrition rate among India’s large and mid-tier technology firms is a case in point. For the quarter ended September, many IT firms have witnessed a more than 20% attrition rate.

Infosys saw its attrition rising by 620 basis points over the first quarter to 20.1%. Similarly, Wipro’s attrition rate reached 20.5% in Q2 of FY22, up from 15.5% in Q1. For HCL Technologies, the attrition rate touched an all-time high rate of 15.7%, up from 11.8% reported in the first quarter. Market leader Tata Consultancy Services had the lowest attrition in the industry, which came at 11.9% in Q2 from 8.6% reported in the first quarter.

Cognizant, the India born IT firm with more than 70% of employees working from the country, saw its attrition rate at 33% during this period. Employee turnover rate is similar in mid-tier and small technology companies during this period.

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“Increased demand for manpower in the technology sector is leading to a higher resignation rate. And these people are working in some other companies. Of course, some people are also opting for gig jobs as that part is growing. However, people in India are not quitting and not working anywhere. That is not happening in India. Because opportunities are so many in the technology sector as of now,” said Neeti Sharma, Co-Founder and President of TeamLease Edtech.

No wonder, Indian IT companies are hiring aggressively to meet the high demand from clients and tide over these high attrition numbers. The top four IT services firms in India alone are planning to hire around 1,60,000 fresh graduates in the second half of this fiscal year. In addition to that, lateral hiring is also in a full swing.

India may not join the league:

The fundamental shift happening in the labour market in the developed economies may not touch India to a large extent. That is because of the difference in the nature of social protection and per capita income of citizens between developed and developing economies.

With a per capita income of around $2,000 and little social protection, the conditions of Indian employees are not comparable to their US or European peers. Moreover, a large population size with a majority of workers being young, make India one of those countries where people are always in search of new opportunities.

Against this backdrop, India may see glimpses of great resignation in some pockets of the economy, but India will remain the powerhouse of the skilled and unskilled workforce globally for the time to come.

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