These are atypical times. The once-in-a-century Black Swan event of 2021 and 2022—we’re not talking Covid-19 necessarily; we’re talking lockdowns—forced governments, companies, schools, colleges, you, me, everybody, everywhere in the world, to go digital. As industry after industry sank to their knees in the face of the lockdowns, corporations frantically upped the pace of digitalisation, unwilling to be caught napping anymore in any lockdown-like scenario, or any other unforeseen-event scenario.

Yet, today it is the tech sector that is handing its employees the most pink slips in a layoff maelstrom.

Flip the coin. Employees are also merrily hopping jobs. I can’t buy an iPhone with this salary, I’m leaving. I don’t like my boss, I’m leaving. This industry has no future, I’m leaving. I’m too good for you, you’re not able to use my skills properly, I’m leaving. I’m falling behind, not learning anything new, I’m leaving.

If I [the employer] am trying to make a good career for you and your interest is short-term, it is not going to work

Vinay Razdan
Chief Human Resources Officer
HDFC Bank

All this, despite mass layoffs in some sectors, global recessionary fears, and inflationary pressures having taken root by mid-2022. Data from HR consulting firm Aon shows India Inc.’s voluntary attrition (as in, you decide to quit) rising to 17.5 per cent at the end of 2022, compared to 15.7 per cent in 2021. That difference is rather significant. In 2021, skyrocketing salaries, exorbitant joining bonuses and multiple job offers had become the norm in the Indian IT sector because of the digitalisation boom across industries. Yet, even in early 2023, it continues to be an employees’ market.

Tech demand may bounce back in a few quarters, as experts have pointed out, and it will trigger rampant attrition again

Roopank Chaudhary
Partner & Chief Commercial Officer
HCM (India and South Asia), AON

“Employees today are married to their skills and not the job,” Deepti Sagar, Chief People and Experience Officer at Deloitte India, says of the post-pandemic workforce. Roopank Chaudhary, Partner & Chief Commercial Officer, HCM (India and South Asia) at Aon, says the tech sector itself is seeing a slowdown, but tech talent remains in high demand in other sectors. “A bright Indian economy means traditional non-tech sectors are brimming with opportunities,” he says, adding that global economy-dependent sectors such as IT/ITeS/start-ups are facing headwinds, while domestic economy-driven sectors such as financial services, FMCG and hospitality are doing well. Data from jobs portal Naukri seems to support this trend: Indian hiring activity saw a low 4 per cent rise in December 2022 compared to December 2021, simply because the slowdown in IT & BPO hiring was offset by growth in domestic economy-driven sectors. “The latter are poised to give out higher hikes in 2023 than they did in 2021 and 2022, while the global sectors are projecting a reduction in increments this year,” adds Chaudhary. However, in the era of digitalisation, IT/tech isn’t going to lie low for long. “Tech demand may bounce back in a few quarters, as experts have pointed out, and it will trigger rampant attrition again,” he adds. HCL Tech’s former CEO Vineet Nayar couldn’t agree more: “In the medium term, the IT sector is headed only one way—up and up.”

As organisations hone their hiring strategies, HR heads have an eye out for a significant change in employee mindset. With boom-and-bust cycles becoming shorter, upskilling, clear career paths and flexibility are beginning to rank higher and higher on employees’ requirements. If these are not on the table, the young employee is happy to head out the door ever so often.

Organisations have realised that to stay relevant as an employer of choice, they must adapt to the workforce [of today]

Deepti Sagar
Chief People and Experience Officer
Deloitte India

Let’s look at tech. Mass layoffs have rocked IT, Big Tech and start-up firms since 2022 when worrying signs of a global slowdown started showing. Aspirational employers—including Top 25 rankers of the BT-Taggd Best Companies to Work For in India such as Google, Amazon and Microsoft, along with Meta, among others—have fired more than 318,000 employees the world over since early 2022. At least 45,000 people have also lost their jobs in India, mostly in the tech-driven start-up space. Recently, Accenture, No. 2 in BT’s Best Companies listing, announced plans to let go of 19,000 people globally, including in India. “We optimise our business and lower costs wherever possible,” says Lakshmi C., MD and Lead-HR, Accenture in India, but adds that it continues to invest in people and the business to capture growth opportunities, and that hiring in India continues across niche skills, functional areas, corporate functions and other roles based on business needs.

We optimise our business and lower costs wherever possible. But we continue to invest in people and our business

Lakshmi C
MD & Lead-HR
Accenture in India

After hiring freshers in droves in 2021 to cater to unprecedented digitisation demand, IT firms are not sparing them now. In January, Wipro confirmed that it fired 452 freshers. “We expect every entry-level employee to have a certain level of proficiency in their designated area of work… Systematic and comprehensive performance evaluation process triggers a series of actions such as mentoring and retraining and, in some cases, separation of certain employees from the company,” the firm had told BT in an emailed response to a query this January. “Over the past few months, there have been several instances of companies rescinding job offers, reducing salaries, laying off employees and implementing extended working hours,” says Harpreet Singh Saluja, President of Pune-based IT employees’ association Nascent Information Technology Employees Senate (NITES). Quess IT Staffing CEO Vijay Sivaram expects a drop in fresher hiring and increased demand for mid-level talent: “It is easier to navigate economic uncertainties with skilled talent than with freshers and entry-level talent where companies have to spend on training them.” Infosys, TCS, Wipro, HCL, Tech Mahindra and Mphasis did not respond to BT’s queries about fresher on-boarding status and overall hiring plans.

The headwinds in the IT and tech sector are driven by multiple reasons, one of which is inflated employee-related costs because of excess hiring when post-pandemic digitisation demand was at its peak, says Sivaram. “There is extra pressure impacting the global tech sector and India being the host of a large amount of tech talent will not be decoupled from this,” he says. The start-up space, especially, which saw dizzying funding and valuations in 2021, has been battered, with funding drying up, layoffs becoming the norm and hiring slowing to a trickle.

But there are bright spots, too.

The indian economy is doing well, and so jobs in non-tech sectors are aplenty. As India’s high-frequency indicators of PMI, IIP and eight core indices paint a bright picture of the economy, opportunities have opened in sectors such as banking, consulting, pharma, retail and FMCG. Naukri’s analysis shows that the hiring activity mix shifted towards domestic economy-driven sectors in the second half of 2022. “All across the world, we were hiring because we were ramping up capacity,” says Vikram Bector, President & CHRO of pharma major Piramal Group, which also has a presence in real estate and  financial services.

There have been instances of firms rescinding job offers, reducing salaries, laying off employees and implementing extended working hours

Harpreet Singh Saluja
President
NITES

The opportunities are also causing a churn, agree HR heads. HDFC Bank, No. 5 in BT’s ranking and which employs 130,000 people, is seeing maximum attrition in the non-supervisory employee category, says CHRO Vinay Razdan. For Axis Bank, which ranked No. 7 and employs 90,000, the way to counter talent retention challenges is by first filling up roles internally. “The big learning is that the talent is with you. Give them the opportunity before the external market does,” says CHRO Rajkamal Vempati.

Then, tech talent itself continues to be in demand in non-tech sectors. Bector says the demand is particularly for AI, ML and analytics. “We’ve built a 350-member team in Bengaluru, which is the hub for our tech function in our retail finance business. We have an equally large business intelligence team of people who do all the analytics,” he says, adding that Piramal Group’s attrition has been falling for the past four-five months, but also points out these can be attributed to a combination of internal efforts and market conditions.

Industry trends aside, there are fundamental shifts happening in the employee psyche that are feeding into attrition. The largely millennial-GenZ population of the workforce are from financially stable backgrounds enabled by working parents. Plus, for them, job options are aplenty, overall income levels are higher than their parents and dual-income couples are the norm.

This has created shifts in employee behaviour in two fundamental ways. One, young employees want income that allows them to spend beyond their means. “Youngsters want a `1 lakh phone even if their salary is less. When they find their expenditure is not supported by the current income level, they go to the market for a 20-30 per cent salary jump,” says Razdan of HDFC Bank. Anandorup Ghose, Partner, Human Capital Consulting, Deloitte India, says his data shows him that compensation continues to be the single largest factor impacting attrition.

At the same time, skills they can pick up on the job, career growth, and flexibility have become important determinants. “People want to work for companies where their minds will be stretched and they want to do it quickly instead of getting into jobs with high pay but low growth or mundane jobs,” says Bector. A senior manager at HDFC Bank with seven years of experience, requesting anonymity, tells BT: “There is a lot of emphasis on learning, training and skilling employees. We are being given training and projects in domains that interest us.” Sekhar Garisa, CEO of foundit (previously Monster.com) APAC & ME, says as the government’s AI and automation push is likely to create new roles, 40 per cent of employees will need reskilling and 60 per cent will need to upskill to be market-ready in the next five years. In addition, Deloitte’s Sagar has found flexibility—of location, timing or career choices—to be a big retention lever. Add mental health and wellness in a purpose-driven organisation, and it only sweetens the deal.

Employee tenures have already been shrinking over the years, several studies have shown. After the pandemic, young employees, especially, may be signing on the dotted line with an eye on the exit door. For an organisation, not only does repeated hiring for the same position drive up costs, but a fast-exiting employee also means sunk learning & development investments. But it takes two to tango, points out HDFC Bank’s Razdan: “If I am trying to make a good career for you and your interest is short-term, it is not going to work.” He says all this dead cost will force organisations to reflect on what needs to be done differently to curb inefficiencies.

It’s already beginning to happen. A business analyst with three years’ experience working at pharma giant Cipla says while there are better salary packages, perks and chances to grow in a company today, contracts are getting stricter. “I know people whose contracts have clauses to prevent job-switching. This is based on their past record,” the person says, requesting anonymity.

The gig ecosystem offers another option. “In areas where speciality lies outside the organisation and we want to deploy it for a period, it makes sense to look at alternative employment models,” says Amitav Mukherji, Head of Corporate Human Resources at ITC, but adds that he would never hire a gig worker for a role critical to the value chain such as a brand manager or a product development expert. Just like the employee is saying, ‘I want to leave you in two years’, organisations are also realising they do not need certain skills to be with them permanently, Deloitte’s Ghose says. “Companies fundamentally need to have behavioural skills, while they can transact on technical skills.”

As the workforce becomes a more diverse mix of specialised skills, generic but necessary skills, permanent employees, gig workers, contractual staff, freelancers and consultants, organisations are tasked with rustling up differentiated talent management strategies. As Sagar says: “Organisations have realised that to stay relevant as an employer of choice, they must adapt to the workforce. You can’t expect the workforce to adapt to you.”

Bullseye.