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Employee attrition isn’t just about people leaving companies, says Rohit Srivastava, Senior Partner, LONGHOUSE Consulting. It is closely tied to business growth.
As companies expand, the demand for skilled workers rises, further fuelled by the emergence of new technologies. This is a scenario that we see currently playing out in the Indian market.
Sectors with higher attrition in 2024
Megha Deb, Engagement Manager-Total Rewards, Zinnov, says, “We believe that attrition is linked to intra-industry migration with professionals seeking competitive salaries and roles to create a tangible impact across industries.”Moderate attrition will persist across industries in 2024, she says. “Software and internet vertical at 12.1% tops the chart, owing to the continued demand for digital expertise to drive transformation plans. This is closely followed by the gaming (12%) and BFSI (11.9%) industries.”
Senior-level attrition rate had surged in sectors such as startups, IT/ITeS and BFSI due to changes in the job market, layoffs and global macroeconomic headwinds. Srivastava says the establishment of new global capability centers (GCCs) in India has further intensified competition for talent. This has led to many companies facing role consolidations and redundancy, leading to increased attrition. Despite a higher attrition rate at leadership levels in startups, he says, the overall employment scenario is not overly optimistic. A scarcity of job openings in the startup ecosystem is inducing individuals to stick with their current positions.
What are the underlying reasons?
Senior-level attrition is being driven by better opportunities, increased demand for specific roles, competitive offers, de-risking and career growth.
In startups, Srivastava explains, the prevalent downsizing, cost-cutting and funding winter are leading high-cost senior resources to perceive potential job risks, further de-risking themselves. He clarifies that in IT services, a significant reason is the lack of growth. Additionally, some companies are consolidating their workforce as some skills become redundant, affecting certain functions, particularly in general management or leadership roles.
In startups and IT/ITeS, the changes in leadership positions are not necessarily about leaving to become CXOs elsewhere; many are also transitioning into more senior executive roles in other companies. Companies are also implementing re-organisational strategies, wherein several boards are seeking new and fresh leadership to implement new strategic initiatives.
GCCs are seeing attrition as they capitalise on new growth opportunities and take on newer charters, making senior leadership more critical, says Mohammed Faraz, Partner, Zinnov. Zinnov’s Salary Attrition and Hiring Trends 2023-2024 study highlights this criticality, especially higher up the ladder.
Faraz sees a significant difference in senior leadership attrition rates between ER&D (engineering, research and development) and non-ER&D functions. While the overall attrition rate across levels stands at 11.5%, it is 6.2% among senior leaders in ER&D against just 3.5% in other functions. Similarly, top level leadership attrition was 4% in ER&D versus 0.7% in non-ER&D functions. “We can attribute this trend to the ongoing strategic recruitment of experienced leaders across industries — especially so as they expand into newer business verticals, driving transformation and growth plans,” Faraz says.
Which skill sets are witnessing the most attrition rates?
The highest churn among top leadership roles are in business leadership, marketing, sales and finance, says Srivastava. “Startups focus on operational optimisation and cost reduction, leading to an impact on functions like marketing, sales, product management and established technologies. In the IT industry, technology and engineering roles are witnessing substantial attrition, as companies prioritise operating metrics like profitability, revenue and scaling operations over continual investments in technology.”
Deb notes that another key factor driving this attrition pattern is the continued demand for ER&D talent and specialised niche skills across verticals. With GCCs’ accelerated adoption of automation and digitalisation, the focus will be on retaining existing talent and enhancing resource utilisation. This has necessitated an investment in a robust employee value proposition — through targeted senior mentorship programmes, alternative career paths, cross-functional exposure, as well as by providing key benefits such as equity-linked long-term incentives into the variable pay structures, or restricted stock units or RSUs (around 60-70% of the pay) — to retain senior and top talent.
Faraz and Deb classify senior leaders as those with 8-12 years of experience and usually having the titles of managers or senior managers; top leaders are those with 12+ years of experience and holding titles such as director, senior director, vice-president and senior vice-president.
Extrapolating these trends for the hiring cycles, Srivastava says that senior executives are open for roles in strategic leadership, digital transformation expertise, program management, human resources, finance and marketing functions, he adds.
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