IT company Happiest Minds Technologies reported a 44.5% increase in net profit to Rs 52 crore for the March quarter, on 39% revenue growth amid record attrition that has almost doubled compared to the previous financial year.
During the quarter, the midsize software company said, its revenue reached Rs 310 crore, rising 38.8% year-on-year and 6.2% sequentially.
For the full year, it recorded a net profit of Rs 181 crore, up 11.5% from the pandemic that hit FY21. The net profit would have been higher had it not been for the full payment of tax at the rate of 25.5% and lower base effect, the management said, adding that it is by far the best among domestic peers.
But the attrition rate jumped to 22.7% in the quarter with a utilization rate of 79.4%. In FY21, churn was just 12.4% and management is appalled at how employees are looking for jobs.
Happiest Minds has one of the highest attrition rates in the industry and the level has steadily increased over the year. From 12.1% in FY21, it increased to 17.8% in Q2, 21.1% in Q3, and 22.7% in Q4.
In fact, the industry as a whole saw attrition jump in FY22 as startups recruited talent like there’s no tomorrow, prompting employees to seek employment. more aggressively.
While Infosys’ churn rate reached 27.7% in the fourth quarter, compared to 25.5% in the third quarter and 10.9% in the fourth quarter of FY21, TCS reported a churn rate of 17.4% in the fourth quarter, compared to 15.3% in the December quarter.
Happiest Minds net added 940 employees and gross 2,930 during the year, bringing its headcount to 4,168. It only net added 147 in the fourth quarter, contrary to its initial plans to net add 300 new faces every quarter.
Regarding the FY23 hiring goal, Joseph Anantharaju, executive vice president, told PTI on Friday that if “we can replicate FY22 hiring levels, we will be happy. Because our conversion rate from an offer letter is only 65% because most job seekers use an offer letter to shop around If we can hit 5,000 by March 2023 , all should be fine.Attributing several reasons for high attrition which was tempered in the pandemic year but returned with an assault in FY22 for the entire sector, Venkatraman N, Managing Director and chief financial officer, said the entire industry is struggling with high attrition.
One of the main reasons for this is remote working, which has made it easier for people to switch jobs. Second, startups attract techies with deeper digital skills, as do global software players and national ITES players who have captive hubs in the country.
Young people today seek jobs primarily to shop around or negotiate a better raise from the current employer, Anantharaju said.
As for growth, they declined to give any guidance, but said that in the long to medium term “we’re going to grow 20% organically every year for the next five years.” Regarding the margin target, which came in at 26.3% during the quarter, Venkatraman said that predicting the margin is complicated and is like predicting the weather today.
On the demand side, Anantharaju said it added 11 new customers, bringing its customer base to 206, and hopes the momentum will continue to be good. Customers have not backed down despite all the headwinds like soaring inflation, supply chain disruptions and the war in Ukraine.
The company will open a center in Bhubaneswar this fiscal year and add one more, but the location is not yet identified.
Cash flow for the year was Rs 289 crore and 98.6% of operating profit.
The company’s stock traded 88 basis points at Rs 998.70 on the BSE, whose main Sensex barometer was down 170 basis points.