At a time when large IT service firms have brought down their attrition level to below 15%, asset heavy IT engineering service providers like Cyient, LTTS and others continue to face high level of attrition rate.
While Cyient’s attrition level is at 20.4%, LTTS during the last quarter reported its attrition at 16.7%. Capgemini’s operations & engineering segment had the highest attrition level at 20.9% in the just concluded quarter. While other IT companies also work in this space, they don’t disclose attrition rate for their asset heavy ER&D segment.
A major reason for higher attrition level at these companies is the growth of IT engineering service sector and the high talent demand from IT engineering service companies and GCCs (Global Capability Centres) operating in engineering research and development (ER&D) space.
Asset heavy IT engineering companies basically service product engineering in auto, aerospace, medical device, industrial equipment, energy and utility sector, in contrast to software engineering companies who are mostly into software products and platforms.
The growth of this space can be gauged by a recent Nasscom-BCG report that said, India is likely to contribute 22% to the global ER&D sourcing market by FY30. According to the report, titled ‘Seizing the ER&D Advantage: Frontiers for 2030’, India’s market share is projected to increase from $44-45 billion in 2023 to $130-170 billion by FY30. “Its vast pool of digital talent and mature ER&D ecosystem make it a preferred destination for global sourcing”, said the report.
Explaining the difference between IT service and ER&D sector, Karthik Natarajan, executive director and CEO, Cyient, said, “IT services are predominantly led by BFSI and tech, and if you look at ER&D which is predominantly led by manufacturing, especially auto, aero, discrete manufacturing and any of the energy and industrial companies, they were actually suffering from the supply chain issues during pandemic”.
According to Natarajan, these industries are recovering and today have today robust demand that they need to meet.