Increase In Employee Attrition Creates Worrisome Situation For Infosys

Increase In Employee Attrition Creates Worrisome Situation For Infosys

Highlights:

  • Infosys’ employee attrition take share increase
  • The IT firm took a voluntary attrition of 15.2%
  • Share price of Infosys Limited fell as much as 5.5% on Thursday

The share price of Infosys Limited, on Thursday, fell as much as 5.5% just one day after the Indian software services company reported quarterly net profit below analysts’ estimates and on worries over the spike in voluntary attrition could squeeze margins.

The Bengaluru based company posted a rise in net profit of 17.5% taking it to over ₹ 5,000 crore ($ 675.4 million) in the quarter which ended on the 31st March. Analysts had estimated a profit of ₹ 5,193 crore, according to Refinitiv data.

The huge rise in attrition is a cause of worry and could be a risk to the top end of margin guidance, Investec analysts said in a note.

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The Chief Executive Officer (CEO) of Infosys Limited Salil Parekh, on Wednesday, said in a call with reporters that the company was targeting margins of 22% to 24% for the full year 2021-22.

Infosys has also reported a voluntary attrition rate of 15.2% for its IT services segment during the March quarter, up from 10% in the preceding quarter.

Investec said, “Considering the strong deal momentum, a continued increase (in attrition) would require higher lateral additions and potentially meatier salary increases to retain talent”.

In addition to employee costs, the Indian software services firm will also have transition costs from large deals and return of some expenses which were saved because of the lockdown induced by the COVID-19 pandemic, Investec analysts said.

Yesterday, Infosys forecast its annual revenue growth of 12% to 14% in constant currency terms for the year to end-March 2022, buoyed by client demand for its digital services during the pandemic.

Quarterly revenue rose to over ₹ 26,000 crore from ₹ 23,000 crore a year earlier.

The company recommended a final dividend for the year of ₹ 15 per share and also approved a share buyback of up to ₹9,200 crore.

Inofsys’ biggest rival TCS (Tata Consultancy Services), on Monday, posted a 15% increase in its profit on cloud services demand, while smaller counterpart Wipro will report results later today.

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Swastika Dubey

Swastika Dubey is a content writer who has a keen interest in politics, fashion, and lifestyle. She is a post-graduate in Economics and loves to listen to classic old Hindi songs and travel to new places in her leisure time. Her writing is well researched, covering important aspects and core of the topic covering crucial points.

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