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Talent Shortage Driving the Push for Rate Increases from Services Providers

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Rising Attrition a Key Challenge across Industries

Talent Shortage is becoming a key challenge for companies across industries which is resulting in an increase in Attrition across organizations.

Technology Industry is No Exception

In its recently released results TCS highlighted an increase in attrition rate by over 300 bps at 11.9%, and the rise in sub-contracting costs.

Considering that TCS reports the leading attrition rates among Indian Technology Companies, other industry leaders which are expected to report even higher attrition rates this quarter.

Price Increase – A solution?

To manage the increased costs related to attrition including sub-contracting costs, retention costs, wage increases etc.; service providers are looking for price increases for their existing contracts.

                          Source: Everest

This increase varies across different functions with IT application development projects citing the highest increase of 10.6%.

With majority of the demand coming from digital transformation, service providers are using innovative ways to fund these initiatives which are targeted to deliver client savings.

They are also using financial engineering and gain sharing mechanisms to retain cost competitiveness as well as provider profitability.