Infosys Ltd is enticing employees with bumper raises, retention bonuses, work rotation and promotions to reverse record turnover levels as companies compete for a limited pool of workers in digital, cloud computing, artificial intelligence (AI) and data science.
The company plans to offer an average raise of 12-13% to its employees in India, while high-potential employees will get hikes of 20-23% and a retention bonus. Infosys is also offering top performers better roles and opportunities to learn new skills such as AI and machine learning (ML). The company is benchmarking salaries with peers and plans to offer special benefits to key employees.
“Infosys will offer top performers between 20-23% increment. There is also a retention bonus for them,” an industry executive said, requesting anonymity.
Demand for tech workers has been surging since the pandemic began as companies initiated digital transformation projects to cope with the disruptions caused by lockdowns, remote working and the popularity of e-commerce. Inflation, which hit an eight-year high in April, is also pushing compensation higher across companies.
Surging demand has prompted employees to switch jobs in record numbers in search of higher salaries, better roles and stock awards. As a result, Infosys posted a record attrition rate of 27.7% in the March quarter, faster than the 10.9% in the year-earlier and 25.5% turnover rate in the three months ended 31 December.
In comparison, larger rival Tata Consultancy Services Ltd reported an attrition rate of 17.4% during the March quarter. Wipro clocked an attrition rate of 23.8%, while HCL Technologies reported 21.9%.
A spokesperson for Infosys declined to comment.
The elevated rate of job switching is a key driver behind wage inflation in technology companies.
However, with 314,015 employees as of March-end, Infosys is going beyond salary hikes to keep its workforce from quitting. Managers have been asked to assure employees that they will be given opportunities to work in different teams and learn in-demand skills such as AI and ML.
“Infosys and its competitors have to also work on legacy technologies, and today, employees want to get on with AI and ML and learn new skill sets. So, line managers are assuring the teams that the top lot will get to work on projects involving the new technologies. It is no longer about onsite opportunities only,” another executive who works with the firm said, requesting anonymity.
Another person aware of the changes said Infosys is also planning a flexi-benefit policy that will offer more perks to its key employees.
Rivals may now have to match the hikes in Infosys as the Great Resignation trend continues in the tech sector. At its post-earnings press conference, Infosys managing director and chief executive Salil Parekh said that the company’s new initiatives would help bring down attrition.
“We also see that many of the initiatives that we have put in place with regard to employee engagement, compensation, rotation of work, career progression, those are already starting to have an impact, and we anticipate they will have an impact over the coming quarters, so we believe we have several of these initiatives in place that will help us as we go ahead,” Parekh said in April.
The increased employee engagement will attract more laterals and fresh graduates to the tech firm. Infosys hired 85,000 freshers last fiscal and plans to hire about 50,000 college graduates in FY23. A senior tech consultant said that the top companies have no option but to absorb the rising employee costs until the attrition levels ease.
The tech sector with the highest churn rate also has non-compete policies, and that of Infosys is in focus. The Union labour ministry is expected to hold a “joint discussion” on Tuesday on the enforcement of the non-compete clause, which prevents an employee from joining a rival tech firm within six months of exiting Infosys.
The meeting will be between the chief labour commissioner and Nascent Information Technology Employees Senate (NITES), the Pune-based labour union that had appealed to the ministry seeking removal of Infosys‘s non-compete clause, and representatives of the company.
An earlier meeting in April was cancelled as Infosys informed the ministry that it did not receive a copy of the public grievance.