Infosys, TCS invoke job clause as attrition rate rises

A congested employment market in the software and BPO industry has resulted in a spike in attrition rates at TCS and Infosys, the country’s top two IT companies by revenue, causing IT firms to resort to unusual techniques to retain employees.

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According to a workers union representing employees in the IT and BPO sectors, Bengaluru-based Infosys is implementing a clause in the employment contract to restrict workers from joining some of its competitors. The union has written to the Ministry of Labour and Employment as well as the Ministry of Corporate Affairs, requesting intervention, reported Indianexpress.

Non-compete clauses in employee contracts, according to Infosys, are “standard business practice.”

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An Infosys employee cannot work for one of the specified competing organisations on a client he or she would have serviced in the prior 12 months after leaving, according to the non-compete clause in question.

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TCS, Accenture, IBM, Cognizant, and Wipro are among the competitors referenced in the employment contract for Infosys’ software services wing. Tech Mahindra, Genpact, WNS, TCS, Accenture, IBM, Cognizant, Wipro, and HCL are the identified rivals in the employment agreement for the business processing management (BPM) wing.

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This happens when the segment’s attrition rate rises. Tata Consultancy Services reported an annualised attrition rate of 17.4% in the March quarter, up from 7.2% in the year-ago period. During the January-March quarter, Infosys recorded a voluntary attrition rate of 27.7%, compared to 10.9% in January-March 2021. Other major IT companies have yet to release their fourth-quarter and full-year figures for 2021-22.

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The attrition rate of a company is the pace at which employees leave. When broken down, it’s the number of individuals who have departed the company throughout time divided by the average number of employees. It’s usually represented as a percentage.

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“It is a standard business practice in many parts of the world for employment contracts to include controls of reasonable scope and duration to protect the confidentiality of information, customer connection and other legitimate business interests. These are fully disclosed to all job aspirants before they decide to join Infosys, and do not have the effect of preventing employees from joining other organisations for career growth and aspirations,” Infosys told Indianexpress.

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TCS, India’s largest IT services provider, has stated that its attrition rate is likely to flatten and then decrease over the following two quarters. TCS has 5.92 lakh employees on its books as of March 31, while Infosys had 3.14 lakh.