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CHENNAI: Bad things happen in good times too. Indian IT companies are finding it hard to recruit and retain employees as the recovery takes a definite shape.

And their bottomlines are getting hit due to rising wages and high attrition. Earnings before interest, tax, depreciation and amortisation (EBITDA) margins or operating margins have been dipping for most of the IT biggies in the recent quarters largely because of the spurt in wage inflation.

Operating margins of Infosys Technologies declined by 2.36% in June quarter compared with the March quarter. Tata Consultancy Services (TCS) and HCL Technologies saw their operating margins falling by 0.7% and 1.1%, respectively. This slide is not an aberration. The companies’ EBITDA has been on a decline for the past four quarters.

On the attrition front, a report by Motilal Oswal, a financial services firm, said that Wipro leads the pack with 23% attrition, followed by Infosys (15.8%), HCL Tech (15.7%), and TCS (13.1%) in the June quarter. The figures have been increasing for all these companies for the past few quarters.

“Attrition at all levels is impacting bottomlines — be it senior, mid or junior level. Companies invest significantly in training entry-level employees. That cost must also be factored in,” said E Balaji, CEO of Ma Foi Randstad India. “As for middle of the year hikes, I don’t think it is a sustainable option and so it is understandable for companies not to opt for that route. It is unlikely to stem attrition.”

None of the companies mentioned responded to this report. The report also states that attrition is likely to stay elevated in the near term after earlier-than-expected turnaround in demand evoked a knee-jerk hiring from IT companies. The challenge of churn is higher at mid and senior-level positions.

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This post was submitted by Chinmaya Nayak.

Thanks to timesofindia.indiatimes.com