Infosys has a new headache — India’s unicorn boom

Infosys has a new headache — India’s unicorn boom
  • The company’s attrition rate has increased to 13.9% in June quarter.
  • Infosys has reported revenue growth of 6% to ₹27,896 crore in June quarter.
  • The technology giant has revised its revenue growth guidance in constant currency to 14-16% for FY22.
How times have changed. For years and years, information technology (IT) services bellwether Infosys was seen as one of the most sought after employers for fresh and early-career engineering graduates from across India. Now, the Bengaluru-headquartered firm seems to be afraid of losing its talent to the tech unicorns of India.A unicorn, in startup parlance, is a private firm valued at or more than $1 billion.

India witnessed 10 unicorns emerging in the first four months of 2021 as compared to 11 unicorns from the whole of 2020.

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In fact, a report by Praxis Global Alliance and 256 Network, says that the club is expected to expand to 150 unicorns over the next three years with India’s wealthiest (high net worth individuals) likely to invest as much as $30 billion in technology startups by 2025.

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Pravin Rao, chief operating officer at Infosys, was speaking to the media via video conferencing after the company declared its first quarter results of the financial year 2021-22.

Rao said, “... Startups are also a very attractive place for many of our employees. And with more and more unicorns out there, that sector is now also increasing focus for some of our employees… we are doing [our] best to retain people and trying to articulate the value proposition…”

Infosys has reported a strong April-June quarter in terms of financials, but the growing startup ecosystem sucking trained employees from the firm seems to be worrying the IT giant.

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“As the demand for digital talent explodes, rising attrition in the industry poses a near-term challenge,” said Rao.The company’s attrition rate in June quarter rose to 13.9% from 10.9% in the January-March quarter. While Infosys has (net) hired 8,000 employees this quarter, it has announced to hire 35,000 employees in FY22 globally.

Employee metricsApr-JuneJan-March
Total employees2,67,9532,59,619
Voluntary attrition13.90%10.90%

Infosys reported a revenue growth of 6% quarter on quarter to ₹27,896 crore in June quarter with a net profit of ₹5,195 crore.

The company delivered strong quarterly growth on high revenue from the digital services segment, which was 53.9% of total revenues.
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ParticularsApr-June 2021 (in rupees crores)Jan-March 2021 (in rupees crores)
Revenue27,89626,311
Operating profit6,6036,440
Net profit5,1955,076

The company has been conducting several activities on retaining employees such as increasing frequency of promotion, skilling them, employee engagement initiatives and so on.

Rao indicated that the situation will continue for a few more quarters.

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“In some sense it is an area of concern but at the same time it is also a reflection of the high demand environment out there and shortage of supply. We expect this situation to continue for a couple of quarters till supply catches up,” he added.

Rao said that the company has increased the number of promotions and hoped that in the “next couple of quarters we will be able to come to terms with high attrition.”

Infosys had given a pay hike in January and the second one will be effective July.

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He also noted, “One of our biggest strengths has been our ability to recruit college graduates, train them and then deploy them in a productive manner.”

Rao must be hoping that Infosys’ old charm will work on these freshers. After all, Infosys was also a technology startup in 1981.

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