The IT sector in India stands at a pivotal juncture, characterised by dynamic shifts and unprecedented opportunities. With a strong foundation in software development, IT services, and digital transformation, fast-growing organisations of the country are global leaders in technology outsourcing and innovation. Moreover, government initiatives such as Digital India and Make in India continue to bolster the sector's growth trajectory. 

But with the immense scope of growth come numerous challenges. 

The challenges

Presently, the Indian IT sector is grappling with several obstacles to success. These include the rapid evolution of disruptive technologies rendering existing skills obsolete, navigating talent shortages, and striking a balance between fiscal responsibility, the urgent need to address skill scarcities, and the ongoing deficit in acquiring high-calibre talent.

1. Attracting and retaining top talent 

In the fast-paced world of IT in India, attracting and retaining top talent isn't just a goal — it's a necessity for sustained success and innovation. The right talent not only brings fresh perspectives and creative problem-solving abilities, but also the drive to push boundaries, leading to groundbreaking technological advancements. 

Unfortunately, organisations continue to grapple with this ongoing challenge. Research conducted by The Integrated Benefits Institute (IBI) indicates that 61% of employers struggle with retaining employees, while 73% face challenges in attracting new talent.

Piyush Govil, Associate Director - Human Capital, Infozech Software Private Limited, agrees. “The major challenge currently faced by the IT sector is attracting and retaining top talent. This has become more difficult after the COVID-19 pandemic, as the tenure of talent has been reduced, and voluntary separation is on the rise across organisations of all sizes,” he said, adding how several organisations continue to grapple with no-shows – employees who do not show up on joining day despite accepting the offer letter. 

“It's also concerning that most job switches are motivated by higher compensation rather than the kind of work the individual wants to do. It's important for job seekers to carefully consider their priorities and goals before making career decisions,” Govil said. 

1. Collaborating in a remote world 

Speaking about another important but often overlooked complexity of today’s workplace, Neeraj Mehra, Vice President of Human Resources Infogain, spoke about how challenging collaboration between teams has become. 

“Uncertainty throughout the world, due to war and other geopolitical reasons, has made customers pull back their discretionary spending. This is making it an exceptionally testing time for organisations, as customer expectations continue to remain high even when they do not want to pay more,” Mehra explained. 

This challenge is increasingly coming to the forefront as more and more employees continue to prefer jobs and organisations that provide work-from-home/hybrid working solutions. In fact, a survey by Forbes magazine shows that a staggering 87% of employees express a preference for remote work arrangements. This just goes to show how important it will be for forward-thinking HR leaders to focus on platforms and solutions that allow remote/hybrid/office-going teams to collaborate efficiently and seamlessly. 

“To deliver on high customer expectations, we need employees to collaborate more than ever, which is becoming challenging in the remote setup,” Mehra said.  

1. Staying ahead of the AI curve 

AI is so much more than a trend. It is an unprecedented technological advancement that is set to transform every aspect of work. According to a report by the World Economic Forum, AI is projected to create 12 million more jobs than it displaces by 2025. India currently boasts a talent pool of 416,000 AI professionals as of August 2023. However, the demand for such professionals stands at around 629,000, a number forecasted to skyrocket to 1 million by 2026, as revealed in a study by Wheebox National Employability Test (WNET). 

“AI continues to haunt organisations and employees in many forms. While employees are scared of losing their jobs, companies are also feeling the heat as customers are asking how AI can reduce their cost of doing business or get more out of the same spending through AI,” Mehra said. 

When leveraged correctly, AI can have a transformative impact across HR levels, especially at the foundational level. From streamlining recruitment by improving candidate sourcing, screening, and selection to leveraging analytics to get insights into performance and engagement, the rise of AI has created endless possibilities for the HR function. While the rise of AI has leaders excited about the endless possibilities, it is also posing challenges when it comes to upskilling and reskilling the workforce in a way that it can stay ahead of the curve. 

1. Redefining the essence of business

Today, with the emergence of Gen AI, the roles of C-suite leaders are undergoing a fundamental shift, believes Shikha Rastogi, CHRO, Bloom CE Technology. “Instead of merely considering technologies, leaders must now focus on redefining the very essence of business. It's about harnessing technology to completely reshape the future of every aspect of work, be it marketing, sales, software engineering, or HR,” she said, adding that given the rapid pace of technological advancement, this transformation isn't a one-time leap but an ongoing, substantial evolution that businesses will experience over the next decade. “The key challenge lies in consistently innovating and adapting, moving beyond traditional 'best practices' to embrace what I term as 'next practices.' Amidst the buzz surrounding the IT industry's journey from data transformation to data intelligence, navigating this continuous change remains one of the greatest hurdles,” she explained. 

Finding the right solutions 

To address talent challenges in the Indian IT sector, a multifaceted approach is essential. Firstly, implementing a targeted recruitment strategy is crucial, utilizing social media and third-party platforms to reach a broader pool of potential candidates. 

Secondly, automation plays a pivotal role in streamlining recruitment processes by eliminating manual tasks, with AI being particularly beneficial for sourcing, parsing, and posting job listings. Lastly, enhancing retention efforts is paramount, achieved through competitive compensation and benefits packages, effective Performance Management Systems, and a holistic employee experience strategy promoting self-accountability and transparency, facilitated by robust HR HRMS.

Some strategies that HR leaders can consider to better collaboration include global tools for seamless communication, shift scheduling software to streamline workforce management, remote clock-in with GPS tracking capabilities for field employees and automation of overtime and leave of absence (LOP) processes to enhance efficiency. 

“There is no perfect recommendation or solution – talent is always on the move, and long-term stay is not guaranteed. However, we have been continually learning and are now seeking candidates who can join early, which does not mean giving a higher counter-offer, but instead, notice buyback as this assures onboarding of candidates early,” Govil explained.  

Organisations are increasingly turning towards hiring software that leverages technology, focuses on candidate experience and can match the right person to the right job seamlessly. Keka’s recruiting management software, integrated with the HRMS platform, allows for flexible hiring workflows for each job posting, fastens the approval process and allows HR to hunt for talent internally.  

Correcting compensation conundrums 

In the IT sector, ensuring stability and incentivising top talent is paramount for sustained growth and success. An effective strategy to achieve this is by providing long-term visibility on fixed salaries, complemented by attractive long-term bonuses. By offering a predictable fixed salary structure, employees gain a sense of financial security, fostering loyalty and commitment to the organisation. Additionally, the allure of attractive long-term bonuses serves as a powerful motivator, encouraging employees to invest their time and skills in the company's long-term goals. This approach not only aids in talent retention but also enhances morale, productivity, and overall organisational stability, contributing significantly to the competitiveness and prosperity of the industry.

Infozech’s Piyush Govil has turned to this strategy to solve talent challenges. 

“While designing compensation, we aim to provide long-term visibility on fixed salaries with attractive long-term bonuses. I have also designed the compensation for freshers, which gives them 3+ years of compensation visibility. It is very attractive and has helped us control the attrition at this level,” Govil explained. 

Keka enables effective management and planning of compensation strategies, ensuring fair and competitive pay for employees. It can accurately handle employee salary revisions, prioritizing what matters most to your workforce.

Training for an AI-driven future 

Over the past five years, organisations across sectors have been focusing on learning and development, to craft a state-of the-art workforce that is resilient to disruptions. 

The wave of AI and automation that has hit the world of work has further highlighted the need to focus on upskilling and reskilling employees. And organisations are turning towards well-thought-out, future-focused training programs to ensure their employees stay relevant, even as half life of skills continue to shorten. 

Organisations are turning to AI for HR tasks, with administrative functions (27%) and candidate sourcing and screening (20%) being top priorities, as per the 'HRs as Change Agents, 2023' report. Companies are deploying AI across various stages of the employee lifecycle. For instance, in recruitment, AI automates tasks like resume screening and interview scheduling, enhancing efficiency. Unilever utilizes AI to screen candidates based on facial expressions and voice tone. Similarly, in onboarding, AI personalizes the experience for new hires, offering real-time support and tracking progress. For example, IBM's virtual assistant assists new employees with company information and office navigation.

“Working and engaging with employees remotely has been a learning for the industry. This has become critical during the last 12 months due to the global slowdown and increasing pressure on existing and new businesses. We have robust training programs for managers and leaders on how to connect and collaborate with their teams while working remotely. Also, monthly events are organised in the office to create engagement and collaboration with employees on trending tech topics that help them collectively solve business problems,” Mehra said.  

“We acquired an AI company in 2020 and have been investing in AI over the last few years. This has helped us acquire a pool of AI-ready employees,” he said. Parallelly, we, as an organisation, are investing in generative AI and have carved out programs that can help employees understand its importance and focus on associated learning opportunities. We have been prioritising the utilisation of our resources and expertise to drive innovation and enhance product quality, he added. 

Focusing on Generative AI

"In addressing the many challenges being faced by our sector, our focus is on transitioning Gen AI from a phase of mere hype to tangible value as projects become operational. As projects go live, we aim to leverage experimental generative AI initiatives to empower clients to extract maximum value from this technology,” Rastogi said. 

Looking ahead to 2024, we anticipate a significant shift as many of our experimental initiatives begin to materialize post-project launch. Our ultimate objective is to evolve these projects beyond their initial productivity focus, gradually enhancing their ability to drive broader value. While this journey is undoubtedly a marathon rather than a sprint, we are committed to prioritising effectively to ensure that our solutions become increasingly intelligent and impactful for our customers, employees, and business stakeholders, she added. 

In a nutshell 

The IT sector in India is teeming with challenges but also – and more importantly – opportunities. As the industry navigates these challenges, forward-thinking HR leaders are exploring innovative solutions, such as early onboarding strategies and long-term compensation plans, to address talent retention and ensure sustained growth in the ever-evolving IT landscape. 

Organisations are investing in learning and development programs to equip their workforce with skills relevant to the AI-driven future. Focus areas include remote collaboration training, AI skill development, and innovation-driven learning opportunities to enhance product quality and drive innovation.

In summary, the Indian IT sector presents immense growth opportunities, but organisations must navigate talent challenges, embrace remote collaboration, and prioritise training and focus on harnessing the power of generative AI to stay competitive in an evolving landscape.