IT companies tap gig workers as high attrition rates bite

NEW DELHI: India’s information technology companies are expanding their talent pool by hiring freelancers, project-based workers, independent contractors, and part-time hires as they battle high attrition levels in an industry experiencing a covid-induced boom in demand.

Collectively dubbed the ‘gig workforce’, these workers are equipped with specialised technical skills to complete pending digital projects and fill new roles that the IT firms need.

In their June quarterly earnings calls, software services firms such as Tata Consultancy Services (TCS), Infosys Ltd., and Wipro announced high attrition rates. Regulatory filings showed TCS had a 19.7% attrition rate in the past 12 months, while it stood at 23.3% for Wipro during the quarter. HCL Technologies’ attrition rate climbed to 23.8% in the June quarter from 21.9% in the March quarter. 

TCS, meanwhile, calls its gig workforce the “talent cloud”, referring to a virtual talent pool available for any project from across locations to meet client demand and project needs. Infosys expects more gig jobs to emerge in the domains of Artificial Intelligence (AI), data analytics, product engineering, cloud computing and UI/UX design. Wipro’s TopCoder, a platform marketplace with 1.5 million freelancing coders, posted a 60% sequential rise in registrations since March 2020.

Tech Mahindra, which hires gig workers for niche skills, has even built an external marketplace called BeGig that enables other employers to hire freelance workforce. The company’s global chief people officer Harshvendra Soin said, “This has helped us create a robust talent pipeline and increased diversity among the workforce”. 

India currently has more than 15 million freelance workers deployed on tech projects, according to a June 2022 Assocham report, which forecast the domestic gig economy to grow 17% to $455 billion by 2024. Another estimate by India Brand Equity Foundation (IBEF) projected the country to have 350 million gig jobs by 2025.

“Overall, the growth of gig workers’ consumption by tech enterprises (IT services firms, IT product firms and global in-house centres or GICs) has seen QoQ (sequential) growth ranging from 2% to 19% depending on the nature of talent consumed,” said Kamal Karanth, co-founder of Xpheno, a specialised staffing solutions firm. The long-held scepticism regarding a gig workforce’s efficiency and dependability has been shaken by the pandemic-induced remote work. Karanth noted that enterprises have matured their workforce monitoring, employee management, compliance and information security systems in the last 12-18 months, while also strengthening the legal framework to manage violations and liabilities.

To be sure, over 50% of companies were hiring gig workers when Nasscom and Aon India Consulting issued their December 2020 report on this trend. The report said that the trend in the next five years is upward looking even though gig headcount relative to total headcount is still low, mostly in single digits.

Sangeeta Gupta, senior vice president and chief strategy officer at Nasscom, said the gig workforce was “evolving to become a prominent capacity development model that will emerge as a key component of the blended workforce model of the future, but it is still in its nascent phases”.

Greater evolution of hybrid work models and favourable government policies to support India’s knowledge economy will further accelerate gig models, leading to availability of a wider talent pool and job creation, she added.

With necessary controls in place, deploying gig workers on mission critical projects is not very different from engaging full-time employees, Siva Prasad Nanduri, chief business officer of hiring firm, TeamLease Digital, pointed out. He added that the staffing firm has seen a 5-6% rise in contingent workers in the last one year, and predicted an 8-10% increase in this category in the next 4-5 years. Nanduri said this has hurt digitisation projects and “companies have offset this loss with freshers and gig hiring”. “Candidates with strong digital skill sets are increasingly being hired by IT firms on a provisional basis, and the trend is here to stay,” he added.

The need for digital skills had also put IT services firms in competition with high- growth startups last year though it has slightly eased now with the ongoing funding crunch in the startup ecosystem.

Jayanth Kolla, co-founder of market researcher Convergence Catalyst, said that until recently, employees with specialised digital skill sets were making a shift to such startups who had longer runways and liquidity on hand, for fat paychecks, which added to the attrition number for IT firms.

While India’s IT sector is no stranger to outsourcing, and has traditionally employed many subcontractors since the 2000s, these companies earlier relied on such workers more for “operational” and “tactical” roles, said Prateek Bhajanka, a research analyst and vice president of products at cybersecurity firm, BreachLock Inc. He added that the emergence of digital technologies like the cloud, DevOps, artificial intelligence (AI), and cybersecurity has led these roles to change over the past 5-7 years. Bhanjanka concluded that greater focus on “transformational” projects, fuelled by the pandemic and the Great Resignation, has made it a win-win for both IT companies and skilled gig workers.