Because attrition is significant, Infosys uses a job clause to keep employees.

  • April 21, 2022, 12:25 p.m.

An overheated job market in the software and BPO space has triggered a surge in attrition rates at TCS and Infosys, the top two IT companies in the country by revenue, prompting tech companies to fall back on unconventional tactics in an attempt to retain talent.

A workers' union representing IT and BPO sector employees has said that Bengaluru-based Infosys is enforcing a clause in the employee contract to prevent workers from joining some of its competitors. The union has written to the Ministry of Labour and Employment and the Ministry of Corporate Affairs, seeking intervention in the matter. For its

part, Infosys has said that such a non-compete clause is "standard business practice" in employment contracts.

The non-compete clause under contention says that after resigning, an Infosys employee cannot work for a period of six months with one of the named rival companies on a client he or she would have serviced in the preceding 12 months before quitting.

Among the rival companies named in the employment contract are TCS, Accenture, IBM, Cognizant, and Wipro for Infosys’ software services wing. For the business processing management (BPM) wing, the named competitors in the employment pact are Tech Mahindra, Genpact, WNS, TCS, Accenture, IBM, Cognizant, Wipro, and HCL.

This comes amid rising attrition in the segment. For the March quarter, Tata Consultancy Services reported an annualized attrition rate of 17.4 percent, up from 7.2 percent in the same quarter last year. Infosys reported an annualized voluntary attrition rate of 27.7 percent during the January-March period, compared to 10.9 percent in January-March 2021. Other top IT companies are yet to declare their fourth quarter and full-year 2021–22 results.

This clause has been there for quite some time. There are a lot of job opportunities in the market because of which the attrition rate is very high. Companies are even matching offers received by their employees from rivals to retain talent. But in the last few weeks, I have received around 65–70 complaints where Infosys is enforcing this (non-compete) clause, "Harpreet Singh Saluja, president of Pune-based IT employees' union NITES, 

It is standard business practice in many parts of the world for employment contracts to include controls of reasonable scope and duration to protect the confidentiality of information, customer connections, and other legitimate business interests. This is fully disclosed to all job aspirants before they decide to join Infosys, and does not have the effect of preventing employees from joining other organisations for career growth and aspirations, "Infosys said in response to a set of queries sent by this newspaper.

In the company’s earnings call for the January-March quarter, Infosys Chief Financial Officer Nilanjan Roy said: "Voluntary LTM (last 12 months) attrition increased to 27.7 percent. While LTM attrition continues to increase due to the tail effect, quarterly annualized attrition saw a decline of approximately 5 percent after flattening in the previous quarter. In the backdrop of various supply-side pressures, we rolled out various measures to reduce attrition—higher compensation increases, higher promotions, skill-based interventions, etc., in addition to higher subcons (subcontractors)". He added that attrition "should come down in the next year".

TCS, India’s largest IT services company, also said that over the next two quarters, its attrition rate is expected to flat line and then taper.

As of March 31, Infosys had 3.14 lakh total employees, while TCS had 5.92 lakh people on its rolls.

Author : Rajdhani Delhi Representative

Rajdhani delhi representative

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