As the Great Resignation abates, service providers must finally dig in on talent development

After a tumultuous two years, the Great Resignation wave seems to be easing. Voluntary attrition is declining across the global IT and business services industry at 16% on average for Q1, 2024.

Across the industry, WNS continues to have the highest attrition rates as in previous years—33% (refer to Exhibit 1) among global IT and business service providers, followed by EXL and TCS (25–26%). However, we are starting to see dips across the board. Some of this could be led by retrenchment and hiring freezes, but many service providers are trying to stabilize attrition and attract and retain talent. Tech Mahindra and Coforge have the lowest attrition rates, pegged at roughly 10–12%.

Here’s how service providers are tackling talent management to stave off attrition:

1. Upskilling and continuous talent development: Companies like Cognizant and Infosys are honing their teams’ skills to foster technical and functional proficiency by mandating education, credential-building, and practical experience in IT and procurement operations. Some are also building digital talent transformation platforms for smooth and constant upskilling.
2. Employee engagement and recognition: Some service providers prioritize staff involvement via committees, digital workflows, performance-related rewards, and public accolade platforms. They are also working toward providing career trajectories and a unified internal social network to facilitate connection, teamwork, education, and employee development.
3. Global talent pool expansion: Firms are expanding their operations globally to tap into a broader talent pool, mitigating high attrition rates in concentrated regions. This strategy has proven effective in maintaining lower attrition. WNS, on the other hand, is leveraging strategic acquisitions and internal IP to scale up talent through internal training and collaboration, aiming to create a pool of category experts and centers of excellence (CoEs). As an enterprise client from the Insurance sector stated, “Service providers need to ensure that a talent tree exists for resources to mitigate attrition.”

As with all large-scale organizational endeavors, change management is the name of the game for service providers. Cultivating a culture that embraces change and aligns with organizational goals helps build a resilient and dedicated workforce that is digitally ready to face the dynamic IT and emerging tech world. They maintain confidence in their employer’s ability to be competitive. From an employee perspective, we see talent looking to settle in and develop vs. scrambling across companies with a pay package as the key factor. Personal growth, a clear career path, and the fear of redundancy have taken precedence over compensation, making the need for skill development a key aspect in choosing an employer.

The Bottom Line: With attrition rates stabilizing, now is the best time for IT and business services providers to shift their focus toward building a more digitally skilled workforce and improving their work cultures to be more employee-centric.

Service providers must understand that their biggest value as employers is to offer the best opportunities for digital and AI training and development as the industry evolves from people to technology arbitrage. Companies that fail to upskill digitally and engage their workforce radically may soon face talent shortages from competitors willing to make those investments.