Happiest Minds tightens skill scrutiny as attrition climbs to 18.2%

Business Standard

4 days ago

Mid-tier IT services firm Happiest Minds is relooking at its talent base and employee skill sets with greater scrutiny, even if it means letting go of some of its workforce.
This comes amid a more uncertain demand environment, with industry giants like Tata Consultancy Services (TCS) deciding to lay off 12,000 people due to their inability to reskill.
'We are relooking at our own skill sets, the incongruencies between demand and skill sets by talking to people because they would not want to stick on where there is nothing for them to do or there is no project,' managing director Venkatraman Narayanan told Business Standard during an interaction after the company announced its first quarter results.
That means the company is asking some of its people to leave if their skill sets do not match requirements or if they are reluctant to upskill. When asked if that is one of the reasons why the company's attrition rose to 18.2 per cent in the first quarter, from 16.6 per cent sequentially, Joseph Anantharaju, co-chairman and chief executive officer, said it is a 'mixture' of a couple of factors.
'We are re-evaluating our people during the training and evaluation process and they may just feel this is not something that's cut out for me and move on. We don't really capture that data separately. We've been a little stringent on our evaluation for the last three years,' he added.
Happiest Minds had 6,523 people as of June 30.
While conducive business environments earlier gave companies the leeway to carry a big bench or excess capacity, that factor has now been thrown out of the window as enterprises go all out to control costs and protect margins.
'Now I think is a time when you can really relook your talent base. We're doing some of that. So all of this is contributing. At the same time, we are very cognisant that we need to keep this number (attrition) maybe 2–3 percentage points lower. And you know, we're looking at various people engagement activities to keep people engaged and bonded,' the CEO explained.
The company's total income rose 18.5 per cent to Rs 57,993 lakh for the first quarter, from the same period a year earlier. Profit after tax was up 12 per cent to Rs 5,713 lakh in the same comparable period. Revenue on constant currency was up 17.5 per cent, and the company said it was on track to clock double-digit growth this fiscal.
The company is also focusing on large deal accounts by pushing the boundaries of its engagement with clients. As part of the move, smaller accounts — with revenue of $2–3 million — would be pushed to generate about $5 million, while accounts yielding $5–10 million will be pushed to the $20 million category.
It has identified 20–24 customers across six verticals out of its base of 281, which are being classified as large accounts, having revenue potential of about $20 million.
IT companies have been saying that demand from clients is changing, making it imperative to adapt to evolving skills in artificial intelligence (AI), generative AI (Gen AI), agentic AI, and cybersecurity. If not, involuntary separation becomes necessary as companies seek to rein in costs.