The Situation: Demand for accessing
Anecdotally, we
talent at scale continues strongly,
but where will we find the talent to
deliver, and how will we retain the
talent as The Great Resignation
rages on?
In the last couple of years, most organizations
have been forced to undergo some fundamental
transformation for the first time in order to
function in a virtual business environment.
We’ve had to step up and address decades of
technical and process debt, switching to remote
work environments, driven by the survival instinct
of operating through a pandemic. While we’ve all
been in a race to cloudify and automate, a talent
war being termed the “great resignation” has
seen many initiatives screech to a grinding halt.
Suddenly people stuck at home can switch jobs at
rapid speed, tempted by attractive wage hikes, or
simply a change of virtual scenery, burned out by
the relentless intensity and grind of the remote
working culture.
As demand for third party services
soars, the movement of talent
reaches unprecedented highs
We can’t get to our virtual promised land without
the help of smart folks who best understand our
businesses to help us figure it all out. Enterprises
need talent now more than ever. This is
presumably a good thing for the global IT and
business services industry because it means
demand for their services is going up. Our latest
market data from the H2 2021 HFS Pulse study
shows 85% expect an increase in IT budgets over
the next 12 months with 7.3% anticipated growth
in third-party technology and business services
spend from 600 Global 2000 enterprises in the
next 12 months.
But as an industry, where will we find the talent to
deliver on this demand? Entering the final quarter
of a difficult year, the global IT and business
process services industry is very much in the midst
of a talent crisis. Staff turnover is a global
challenge, but the problem is acute in India. The
average global attrition rate for Q3 2021 is 20.4%
for announced results. While these officially
reported figures are not India-specific, we believe
© 2021, HFS Research
India’s attrition rate is far higher.
hear that companies’ attrition rates in India are
hovering anywhere between 30% and 50%, which
is undoubtedly more elevated than the last few
years. Against this backdrop, HFS held a digital
roundtable featuring eight tech and services
leaders and eight enterprise leaders on the
biggest change agent of them all, our talent.
Unpacking how we got to the talent
crisis: Strong enterprise demand for
talent and weak employee value
propositions all around
These key reasons contributed to this talent
crunch across Indian IT and BPO markets:
An unexpected pandemic demand surge as
global clients try to pivot their operating models
to respond to numerous market changes, not
least seeking cost savings, is emptying the talent
pool. The supply side as a whole underestimated
this comeback in demand following last year’s
initial slowdown. The result is a lack of ready
talent within the enterprise, as most providers
maintain a lean bench of resources. “Software is
the alchemy for every industry, and every industry
is going to embed software and technology into
its products,” shared Ravi Kumar S, President,
Infosys, adding, “…there are ways to bridge the
skills gap - there will be more re-skilling
investments, there will be pivot from degrees to
skills, labor participation will go up as people who
are not participating will do so as they move from
full time to part time, and consulting firms like
Infosys will lend value chain of human capital – we
will have to help customers, enterprises to re-skill
their human capital.”
In addition, finding talent with the right skills to
cater to the rising demand further fuels the
“talent demand-supply gap.” Indeed, with
demand coming roaring back, the roundtable
delegates were confident that the industry has a
long future ahead of it. But the key will be
rethinking our approach to talent management.
Sandeep Dadlani, Chief Digital Officer at Mars,
was feeling optimistic, “The demand for tech,
right-sourcing, software led processes, upskilling,
process intelligence and automation….is
infinite…There’s so many levers to unlock for the
next few years, and this industry has a lot of value
to offer for a long time to come.”
2
The employee value proposition is in jeopardy for
many service providers. Due to the pandemic, the
priority for leaders has been on business survival
and sustenance. For many, employee experience,
communication, and engagement weren’t on the
top of the list! In addition, working from home
has only made it harder for employees to feel a
sense of “connectedness” and “be part of a
corporate culture.” So, when the market demand
surged, and opportunities lined up, experienced
resources now ask for higher compensation, more
flexible work-from-anywhere environments,
healthcare, and other perks that are not always a
given, especially in India.
• It’s just that easy to switch jobs right now. If
employees are disengaged from their
organizations, a quick Zoom interview or two
later, and they are able to secure a new
employer. Aloys Kregting, CIO, Akzo Nobel
spoke about this harsh reality, sharing, “For so
long, we have had people that are working
from home, including those that have recently
joined, don’t know the culture of the company
or have a sense of belonging. It’s gone. That
fuels people resigning and trying somewhere
else, being disappointed in the company.”
Exhibit 1: An increasing number of enterprises are sensing the need to return to
physicality
What is the expected level of WFH (work from home) for your organization in the next
12 months?
Percentage of respondents
Weighted average for % WFH across H1 and H2 2021 stays
Substantial increase
the same at ~40%
in % respondents
27%
who desire a return
to physicality
21%
19% 18%
16%
<1%
Less than 10% 10% to 20% 21% to 40%
Sample: 800 respondents (H1 2021) and 600 respondents (H2 2021) from Global 2000 enterprises
Source: HFS OneOffice Pulse Study, H1 2021 and H2 2021
© 2021, HFS Research
How do we address the talent crisis
as an industry? What are the
emerging strategies in play?
#1: Instating flexibility as a core component of
the employee experience
Employees want human connections, and they
also want flexibility…we’ve reached the Hybrid
Paradox! Flexibility is also about “why you want
to work,” “who you want to work with,” not just
“when you work.” HFS has observed a marked
shift in thinking on this subject among enterprise
leaders, evident in our Pulse market data over this
year. In H1 and H2 2021, we asked 800 and 600
enterprises about their expected work from home
ratios for the coming 12 months. We’ve found
that the weighted average stays the same
through this entire year - ~40% are expected to
work from home in the average company. But
what’s interesting is that there’s an increasing
desire to drive up the physicality of our work
interactions in the last few months. 16% of
enterprises now believe that less than 10% of
their workforces will WFH this coming year, vs.
less than 1% believing that in H1 2021
(see Exhibit 1).
H1 2021 H2 2021
28%
24%
16% 17%
4% 5%
41% to 60% 61% to 80% More than 80%
3
The roundtable delegates acknowledged the
uncertain nature of WFH mandates tied to the
pandemic. However, the consensus was that
there is no ‘going back’ to 100% office working
cultures, but some elements of workstreams will
need adjusting. Cliff Justice, US leader for
Enterprise Innovation at KPMG, shared, “I don’t
necessarily see the desire to return to a Monday-
Friday type of office job. But the level of creativity
and problem solving that has to occur with the
increasing challenges and opportunities in the
current environment require more of that
interaction…people getting together in group
settings, whiteboarding together, in a
collaborative environment. It’s just very difficult,
stressful, and draining to do that in remote video
conferencing environments.”
At the same time, companies will need to
manage a balancing act on providing employees
flexibility in their jobs. We need to provide
avenues for enhancing the employee experience,
and thanks to the pandemic, flexibility is
emerging as a critical pillar of employee
satisfaction. To the extent possible, enterprises
must focus on employee experience (EX),
recognizing and enabling the mode of working
that suits each employee based, based on their
work profile. Aloys Kregting, CIO, Akzo Nobel,
rightly recognized the need for offering flexible
work options since every employee is different.
He shared, “I found out fairly quickly that some
people love working from home. A lot of people
don’t necessarily enjoy interacting with other
people every day. They love this situation…What
is important is that you have a customized
approach, those that miss the interaction should
be able to subscribe to digital lunch dates, and
other ideas. It is unavoidable that we will see a
higher level of WFH, and need to compensate for
that as leaders, human beings, to different ways
of working.”
Tiger Tyagarajan, CEO, Genpact, summed it up
by saying - “Any rising tide separates winners
from losers than no change. Enterprises as well as
service providers will grab this as an opportunity
and be able to attract and retain talent because
of culture, orientation to purpose because they
have orchestrated a vision for ESG that is
absolutely real, that they walk the talk on serving
stakeholders.”
© 2021, HFS Research
#2: Finding ways to share culture and a sense of
belonging in a hybrid world
Work cultures cannot be forced; they develop
organically. They also traditionally evolved around
the watercooler, the informal gatherings and
conversations, and shared experiences at the
workplace. During the pandemic, many of us put
“softer” elements of culture and shared company
values on the back burner, while keeping
operations ticking took precedence. Almost two
years later, the talent crisis is a sure indicator that
enterprises need to rethink how to develop and
share what makes working for them unique, and
culture is a great place to start. Mattijs Backx, SVP
& Head of GBS, PepsiCo, had profound
observations on the topic of culture, “As an
industry, we need to adapt and think, how do we
orchestrate performance in more of a hybrid
model. Culture building that was historically tied
to an office is very different now. One of our
biggest challenges there is creating belonging.
Looking at HFS’ market data on attrition being
20%, that means a year from now, half of our
employees, most of them will not have worked in
a physical office. How do you create culture in
that environment, or belonging?”
Sandeep Sacheti, EVP, Wolters Kluwer
summarized it well, “It is clear that employees are
asking for a different level of engagement from
their leaders. They are asking for connection,
learning, and growth. Fortunately, at Wolters
Kluwer we are creating a culture of addicted to
learning and grow with us while connecting the
dots to their work and creating pathways for
development.”
#3 Revisiting how we think about skills
For the last few years, the outsourcing industry
has spoken about skills mostly in the context of
digital technology and data skills. And rightly so.
As emerging technologies quickly embed
themselves into the core operations of every
industry and business function, talent bases – no
matter what work they do – must become data
and digital proficient. As HFS, we refer to this skill
set as “digital fluidity.”
4
Tiger Tyagarajan, CEO, Genpact, had an
interesting take on the need for digital fluency
with the rise of ‘trilinguals,’ sharing, “Everyone
wants skills, now, and to drive change. Those are
such great problems to solve…It’s clear that
digital, data, and building insights to help
decision making is no longer an enabler; it is the
business. Become trilingual, across 1) the domain
you know, 2) the language of data, and 3) that of
digital technologies. Reskilling around this allows
better solutions to be built.”
As an industry, we’ll always be in a learning mode
when it comes to digital fluency. Whether you
graduated from college a year ago or a decade
ago, the pace of technological change and its
adoption into business is not slowing anytime
soon, meaning learning must become an intrinsic
part of work. In fact, Ravi Kumar S believes the
days of earning a traditional college degree may
soon be numbered, stating, “Why do we need
degrees? If the life[span] of skills is so short, the
world will pivot from degrees and skills—and
education will be intertwined with the model of
work.”
Digital and data skills are a here-and-now need,
but they are far from the only skillsets and work
competencies the industry needs to be prepared
Exhibit 2: Enterprises are not investing adequately for skills considered critical for
survival
Are the skills we need today going to be extinct in two years?
Survival criticality versus investment priority of HFS OneOffice™
Initiative
Relative
investment
priority Appetite for change
(technology
investment
Social influence
priorities over
the NEXT 18 Interaction
MONTHS)
Relatively under-invested skillsets
Less critical
(required in 2 or
more years)
Survival criticality
(When do you think each of the following will become A
REQUIREMENT for business survival?)
Sample: 500 Global 2000 enterprises
Source: HFS Research, 2021
© 2021, HFS Research
for the future of work. In a recent study, we
analyzed what skills will be required for the
OneOffice, mapping seven core skillsets,
including initiative, values, problem-solving,
digital fluency, appetite for change, social
influence, and interaction. As a part of the study,
we surveyed 500 global enterprises on what they
believe are the most important skills and how
they prioritize investments accordingly. As Exhibit
2 shows, most of the seven skills are thought of as
critical for survival. But we still don’t see the
requisite levels of investments across most
categories.
Shiva, CEO at iOpex, made similar observations
and shared his company’s experience with skills
training during the pandemic. He recounted that
most employees requested training, which was
met by iOpex’s increased budgets for internal
and external coaching and certifications. But what
was interesting was the type of learning people
wanted to undertake. Shiva shared, “We didn’t
set constraints on specific skills that people
needed to learn.” As a result, employees started
showing interest not just in digital technology
skills, but soft skills. “Personality growth was a big
one, with employees stating, we want to be bold,
we want to take a holistic view of transformation.”
Initiative Readiness and ability to self-direct, self-
High motivate, and turn ideas into action
priority
Problem- Thinking and processes behind finding
solving solutions to difficult and complex
Problem-solving objectives
Digital Ability to drive interplay between
Values Fluency business and technology
Values Guiding principles in attitudes and
Digital
actions
Fluency
Interaction Ability to constructively navigate
feelings and approaches with oneself
and others
Low
priority Social Having an impact on others in the
influence organization, and displaying energy and
leadership
Critical for survival
(required today)
Appetite for Readiness and ability to embrace
change change
5
While much of the talent drain has been losing
people to similar firms for higher wages, there
has also been a noticeable exodus of people to
start-up organizations which offer the lure of stock
options and “unicorn” culture. According to
Srikrishna “Keech” Ramakarthikeyan, CEO
Hexaware, “True innovation needs talent that
goes to unicorns. How to attract and retain that
talent needs creative solution approaches”.
In short, innovation must be encouraged as both
hard and soft skills are developed and refined.
Kelly Chambliss, SVP of Americas and Strategic
Sales at IBM, stressed that it is “so important to
recognize and reward both types of skills, as hard
skills such as machine learning can become less
relevant quickly, but soft skills like collaboration,
communication or curiosity are more important
than ever and are more likely to determine our
success in achieving a goal. And so, it is really
important that we factor those skills into our
learning and development programs and our
mindset and ways of working. One of the best
ways to do that is to create an environment where
we apply our curiosity in our way of working and
how we come together to solve problems.”
Exhibit 3: The pandemic has taught enterprises that talent management strategies
need a complete re-haul
9 out of 10 organizations realize that they need to reposition their organization to
unleash people in the post-Covid world
Our approach to talent management post-Covid
remains the same?
Percentage of respondents
13%
87%
No Yes
Sample: 400 Global 2000 enterprises
Source: HFS Research, 2021
© 2021, HFS Research
#4 Taking a broader and more creative
approach to sourcing talent
At the end of the day, the global IT and business
services industry found its origin and maintains a
core part of its value proposition around
providing talent at scale. When the very founding
pillar of the industry shakes, it shows. The great
resignation has taught us that as an industry, we
need an entirely new approach to traditional
recruitment engines or even the concept of full-
time equivalents as a pre-requisite for success.
As explained by Suzanne Leopoldi-Nichols, Chief
GBS Officer at WPP, “the buy-side has had to
make a shift from seeking the ‘right talent’ to
seeking ‘the talent’ and the last 18 months have
caused a fundamental shift in how we engage
talent and our stakeholders. Whether we’re
looking at education, ESG, mental health, growth,
and opportunities, we have to ensure with our
partners that they are looking at the same things
as well, to ensure we don’t have the turnover and
have a consistent process and outcomes for our
companies.”
How are you repositioning your organization to
unleash people in the post-COVID world?
Percentage of respondents
We are harnessing data to empower
insights and decision-making
27%
We are building a new organizational
31%
playbook to reimagine change…
We are scaling collaboration capabilities
through anytime, anywhere, any-device…
32%
We are training business staff to
understand and deploy technology
39%
We are training technology staff to have a
43%
better understanding of business
We are retraining managers and leaders 48%
We are boosting HR transformation and
Talent development budgets
50%
6
Let’s be honest; the hiring practices in our
industry primarily rely on recruiting fresh talent
straight out of college or poaching talent from
each other’s firms. Indian outsourcers have
become tremendously proficient at hiring and
providing training and onboarding en masse to
university talent.
Sandy Khanna, Global Head of Shared Services at
Anglo American, said, “We all poach from each
other. I know we do. But having spent some time
on both sides of the fence in
industry, and particularly given the world we have
all just lived through, focusing on the 4Cs, as I call
them, has been key. It’s important we look at the
inclusivity and diversity of hiring and the 4Cs that
make the difference in my environment -
companionship, collaboration, creativity, and
culture. These are the four things that, if we focus
on the right way, will really allow us
to attract, retain and develop the people we want
to invest in. I have found that focusing on those
four, as well as the vision and well-
being agendas we all drive to demonstrate the
depth of career paths in our companies, is one
way we can all differentiate in attracting
and retaining additional talent outside of this
industry. It is critical, CRITICAL, that I do this so
that I don’t compete with my ecosystem partners
who I need to succeed.”
Robbie Dagger, People Director at Tesco, added,
“What you stand for as an organization was
always important, but now, people are making
choices about things now based on this – it really
matters. You’ve got to make some big bets, some
hefty long-term investments on capabilities and
upskilling. It needs to be about everybody
learning together.”
© 2021, HFS Research
As the talent crisis persists, the industry will need
to find mechanisms to recruit talent from other
industries, as well as seek creative new ways of
sourcing skills and expertise. Stephanie
Trautman, Chief Growth Officer, Wipro, shared
their unique approach, “We’re using new sources
of talent. We do have access to talent today we
didn’t have before due to the hybrid work
environment…At Wipro, we have platforms to
reach talent just in time, reach niche skills and
really engage the gig economy to address urgent
needs. These are some of the creative
approaches we’re all taking…but it is certainly a
challenge to attract and retain challenge, you
have to give people an incentive to want to join
and stay with you and create innovative and
exciting careers for them.”
In terms of differentiation, Jay Desai, VP and
Head of GBS at JTI, stressed that differentiating
your organization in terms of who you are is key.
“Creating the employer branding experience and
making sure you have a truly unique employee
value proposition is key for us. Flexibility, choice
and agile ways of working are foundational to
what we are building.”
So are we in a bubble or is this how it is going to
be? Co-CEO and Co-Founder of Celonis, Bastian
Nominacher stressed “I don’t think it’s a
short-term bubble. I think this is here to stay…
we all need to work together from different
angles: People topics, like how we upskill, culture,
as well as from the technological side. We’re in a
storm, and as an entrepreneur, you have to
embrace it, take it head-on and make the best
out of it.”
7
 The Bottom Line: Enterprises need
talent now more than ever

The Great Resignation is teaching us that to have a shot at attracting

and nurturing talent sustainably in the future, the global IT and business
services industry needs to completely rethink its current understanding
of employee experience, culture, skillsets, and talent sourcing. If attrition
worsens further, delivery of services is going to become impacted to
such an extent there could be a wholesale backlash against outsourcing.
As much as we want to rely on technology to substitute the need for
people, the pandemic has taught us that people collaborating is where
innovation happens, and there is no substitute for the idea creation and
energy people can bring to the table.

© 2021, HFS Research 8

HFS Research authors
Phil Fersht
CEO and Chief Analyst
Phil Fersht is widely recognized as the
world's leading independent analyst
focused on the alignment of business
operations and technology spanning over
two decades. He has a global reputation
for calling out the big trends, unafraid to
share his honest views, driving a narrative
on the technology and business services
industries that shape many leadership
decisions. His reputation drove him to
establish HFS Research in 2010, which has
today grown into one of the leading
industry analyst firms and the undisputed
leader in IT business services and process
technologies.
© 2021, HFS Research
Reetika Fleming
Research Leader
Reetika Fleming leads coverage for smart
analytics, insurance, and finance and
accounting at HFS Research. She studies
the broad use of data and analytics within
enterprises, with a research focus on
emerging strategies to institutionalize
machine learning and other AI techniques.
Her research extends into the impact of
digital business models, IoT, smart
analytics, and AI on business process
services for insurance specifically, and
finance and accounting broadly.
9
 About HFS
Insight. Inspiration. Impact.
HFS is a unique analyst organization that combines deep visionary
expertise with rapid demand side analysis of the Global 2000. Its
outlook for the future is admired across the global technology
and business operations industries. Its analysts are respected for
their no-nonsense insights based on demand side data and
engagements with industry practitioners.

HFS Research introduced the world to terms such as “RPA”

(Robotic Process Automation) in 2012 and more recently, the HFS
OneOfficeTM. The HFS mission is to provide visionary insight into
the major innovations impacting business operations such as
Automation, Artificial Intelligence, Blockchain, Internet of Things,
Digital Business Models and Smart Analytics.

Read more about HFS and our initiatives on:

www.hfsresearch.com or follow
@HFSResearch