‘Talent shortage, increased attrition remain key challenges for tech firms’
Some of the leading tech firms announced a combined deal pipeline of more than $15 billion during the second quarter of FY22, signalling the continuation of the positive demand momentum in the market, Nasscom said in its quarterly industry review released on Friday.
During the September ended quarter, attrition maintained its uptrend reaching 19.3%, up from 17.5% last quarter, and this increase continued to be driven by the rising demand for new-age digital skills across industries, the apex body said.
In an analysis of the Q2 performances of member companies, Nasscom further said talent shortage driven by increased attrition, remained a key challenge that tech firms required to address on priority.
Employee count increased 5.3% q-o-q, and was up 17.5% y-o-y as hiring remained the key strategy to counter talent availability. Utilisation levels across companies continued to trend at record high levels. Also, the demand environment remained as healthy as companies’ plans to hire more in the next few months of 2021, the review stated.
However, Nasscom’s review found, net margins of companies continued to decline sequentially primarily driven by salary hikes, new hires, increased sub-contracting costs as well as travel and facility costs. The quarter, also witnessed y-o-y margins declining as talent availability continues to put pressure on hiring, retaining and sub-contracting costs.
Yet, companies are maintaining expectations of a double-digit growth guidance for the full year FY22. The optimism continued to increase this quarter as well with most companies reported revised guidance, as per the review.
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