Current attrition cycle very different from earlier ones: Frank D’Souza

‘Employees who quit are refusing to consider counter offers by employers, they seek space for creativity, innovation’

The technology services industry saw a good run during the course of the pandemic, delivery from remote locations even for newer technologies gained acceptance from customers. In tandem, as demand from customers rose, the war for talent too intensified. Though the industry has gone through these cycles of crests and troughs for talent, former Cognizant vice-chairman Francisco D’Souza said this cycle is fundamentally different from past ones. He currently runs Recognise, a growth fund that invests in tech services companies. Excerpts: 

This cycle is fundamentally different from past cycles. While there may be on the surface, some similarities, I would say that the playbook on attrition and retention of the past is not necessarily going to work going forward. The conventional wisdom about the current levels of attrition in the industry is that we had a COVID-induced shock to demand because COVID accelerated digital transformation around the world.  

We transacted more online, shopped more online, banked more online, and even did more of our healthcare online. So there was an acceleration in demand. And at the same time, at least early in the pandemic, during the time of great uncertainty, firms in the industry pulled back on supply because the future was relatively uncertain. So they scaled back hiring plans.  

So the conventional wisdom [tells us] there was supply demand imbalance—where demand increased, perhaps unexpectedly, supply didn’t grow as fast. This led to this wage inflation, which is leading to high levels of attrition. That view, obviously correct at the surface, tends to oversimplify things and fails to recognise some important trends.  

The first is that there are very clear signs that there seems to be a fundamental frustration in the relationship between employees and employers that goes beyond compensation. 

I saw some research that was done by AON India, that as many as 90% of employees who resigned in recent times from companies were offered extremely lucrative counter offers by their existing employers. But only 35% chose to stay back. So what happened to the rest of them? Why did they still move on despite compensation being essentially neutralised? There’s something else going on here. If you look at the technology services industry, it’s important to understand that over the last 40 years or so, the nature of work that technology services firms are doing has changed fundamentally because the role of technology has changed. A few decades ago, technology was a back-office enabler for most businesses. Therefore, the work of an IT services business was very algorithmic and procedural. We wrote functional design, technical design and code and did unit testing. We had quality systems where checkers checked the work that people did, and then there were checkers who checked the work of the checkers. 

But today as technology has become a more fundamental enabler of businesses, it is the product of most businesses. The work of an IT services business is becoming much more creative and heuristic and much less algorithmic. This has made work much more intrinsically interesting. That means how you configure the workplace and your culture, how you attract, retain and motivate people is fundamentally different. Organisational cultures that were built in the world where work was more algorithmic, need to evolve dramatically for the world where work is much more creative. I think this mismatch of culture between the work of today and the work of the past is something really to keep in mind. This is one of the fundamental drivers of attrition that we see today.