Small and medium IT companies are yet to recover from the effects of the Covid-19 induced lockdown because of the high attrition rate of their employees after upskilling, according to a survey. After the lockdown, small and medium sector technology companies had a 35% attrition rate, according to a Micro Small and Medium Companies-Export Promotion Council (MSME-EPC) survey, as skilled workers leave their companies in search of higher pay.
After this, the services sector attrition rate is 27%. As a result, these areas’ hopes for returning to normalcy following the epidemic have been dashed.
While releasing the report of this survey of 700 IT units on Wednesday, D S Rawat, Chairman, MSME-EPC, stated that many employees in MSME sector companies are leaving for higher salaries at other companies after learning the work.
As a result, many companies have yet to recover from the lockdown’s shock fully. Technology companies invest a lot of time and resources in training their employees, yet afterward, those employees move to other companies for higher salaries.
To overcome the high attrition rate, he said it is necessary to develop more and more capacity-building centres in both the public and private sectors. This will result in more efficient workers, decreasing the number of people switching jobs from one organization to another.
According to Rawat, the rate of attrition in the industrial sector is low, but companies in the technology sector still have trouble keeping their employees. In addition, the attrition rate in the manufacturing sector is 20%. In the service sector, particularly the financial sector, it is 27%. In the e-commerce sector, it is 26%, and in the pharmaceutical sector, it is 25%.
According to the survey, large and multinational companies face a serious threat to the survival of tech firms in the MSME sector. Losing a trained employee in such a circumstance puts them under more stress, ultimately, a threat to their company. The people under the most pressure are those that “outsource” their labour or make it their livelihood to finish projects by a certain deadline.
According to the survey, many MSME industries are adopting digitalization to increase their domestic and global market share. Due to the high employee attrition rate, the entire business plan for this industry is collapsing.
