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IT firms have a culture issue

The most important among those is the fading understanding of the company culture among staffers
Last Updated 06 March 2022, 13:25 IST

Indian IT services companies are eager to get their employees back in offices- if not all, at least a major portion; if not five days a week, at least for two days. This willingness to shift from completely WFH (work from home) mode to hybrid operating model is high among large IT services firms. And the reasons are multifold.

The most important among those is the fading understanding of the company culture among staffers. Though this may seem irrelevant from an external façade, company and work culture breed loyalty among employees.

As a result, people stick to organisations and contribute towards achieving the objective of the company.

This alignment of organisational goal with individual goal plays a vital role in an enterprise’s survival, growth and prosperity.

Experts are of the opinion that these are not vague concepts and rather have practical utility in the environment when the world is going through a pandemic.

It is not hard to understand that a virtual mode of working has led to loss of human touch and camaraderie.

“What is there in an IT company? It’s only the culture. All their machines are laptops which can be connected from anywhere. The biggest problem today for the HR managers is that employees don’t know what is the culture of the company? The reason is that many of them have been hired newly. Given the high attrition level, we can safely say already 30 per cent of the people have left in the last 18 months. The new people have very less idea about what the company is, what is the culture of the company because the managers have no face-to-face interactions with any of them. That might have happened in virtual platforms. That is the reason that we are witnessing the problems of impersonation, moonlighting, and many more,” said Aditya Narayan Mishra, Director and CEO of CIEL HR Services.

High attrition, moonlighting, steep competition

According to industry watchers, relationship among IT staffers and companies are becoming transactional. Not only the ethical standards are falling, but also attrition rates are spiking with high job offer drop out rates.

In the last two years, attrition rates are surging amid a robust demand for technology talent.

For the quarter ended December 2021, Infosys’ voluntary attrition rate stood at 25.5 per cent from 20.1 per cent in the preceding quarter. For Wipro, attrition rate was at 22.7 per cent, up from the rate of 20.5 per cent in the second quarter.

Even for the market leader Tata Consultancy Services (TCS), which usually had low employee turnover rates, also witnessed a spike. Its attrition rate rose to 15.3 per cent in the third quarter of FY22, as compared to the previous quarter’s rate of 11.9 per cent. Things were similar for most mid-tier IT services and engineering services companies.

Not only high attrition rate, some estimates suggest that job offer drop-out rates are higher to the tune of 50-60 per cent among new hires as compared to 10-15 per cent in the pre-pandemic period. Many employees are also indulging in moonlighting.

When an employee takes up a paid assignment from other employer when having a regular job, it is called moonlighting. Most of the time, employees are under contractual obligation not to take up such assignments.

“The pandemic and the resultant WFH has brought many employee issues to the forefront, and one of them is that of employees moonlighting on a regular basis. In some cases, employees have declared this to the employers but in most, this information is not divulged, thus leading to discipline and compliance issues,” said a HR manager who wished not to be quoted.

Apart from such risks, IT services companies are also facing steep competition from the startup world and GCCs (global capability centres) of MNCs in hiring of talent. Both these segments of technology ecosystem are better paymasters than IT services companies on most occasions.

Analysts are of the opinion that the competition is going to be more fierce in coming years. A recent Nasscom study said the demand-supply gap for digital talent is expected to increase over 3.5x to 1.4-1.8 million range by 2026. If this happens, IT firms have to manage talent decisively in coming years.

Existing initiatives

Sensing the challenges, IT industry has already been pursuing various initiatives to win the talent war.

Apart from aggressive hiring of fresh graduates, IT firms are also coming up with various employee engagement initiatives. Better incentives, frequent promotions, better ESOP programme are some of those areas in which most IT firms are working on.

However, as the Omicron wave recedes, there is a strong likelihood of employees getting back to offices. This is because most HR managers feel without human touch, managing a large talent base will not only be herculean but also be unsustainable.

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(Published 27 February 2022, 16:20 IST)

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