The attrition rate in India for 2024 was an average of 17.4%, as per the Deloitte India Talent Outlook Survey. The rate was hailed as a significant improvement over the past years, having been the lowest in value since 2020.
A significant force behind the decline in attrition within the country can be attributed to the efficient analytics of employee data. With the right tools, companies are now able to identify risk factors and potential departures months in advance, allowing them to take countermeasures to rectify the situation.
For a company, each employee is an ongoing investment, and their presence can be safeguarded thanks to the effective use of data analytics in HR.
The Attrition Decline in Indian Enterprises
Attrition is a double-edged sword that can prove detrimental to both employers and employees. Industries across India have worked hard to retain their talent, and their efforts are evident through the numbers.
Most sectors within India saw an active decline in attrition in 2024, when compared to 2023. 2023’s average attrition rate of 18.1% was reduced to 17.4% in 2024. Within specific sectors, this change was more evident when compared to others.
Financial services saw an attrition rate of 26.4% in 2024. While this number is significantly higher than the national average, it was still an improvement over the previous year’s 27.9%. This highlighted the effects of retention strategies that the companies have started to implement through the use of technical tools like data analytics.
The IT and ITeS (Information Technology Enabled Services) sector saw a much more drastic decrease in attrition, with IT jumping from 19.3% in 2023 to 15.1% in 2024. Similarly, the attrition in ITeS sector came down to 10.8% in 2024 from 18.7% in 2023.
Amidst the decreasing attrition rates, the consumer services sector stood out as its attrition had increased in 2024 at 18.4%, an increase of 1% from 2023.
Data analytics in play
Yes, attrition rates are declining, but how much of a role does data analytics have in this development?
According to McKinsey and Company, the use of people analytics can lead to a 50% decrease in attrition rates.
With such an advantage in hand, it is no wonder that companies are becoming more and more open to the implementation of analytical tools to create effective retention strategies.
According to AI APL, the use of predictive analytics in HR can reduce unexpected departures by 47%. And it is not just talent retention where this piece of technology can work its wonders.
With an annual cost saving of $2.1 million with reduced recruitment efforts, people analytics allows companies to better allocate their resources while maintaining an efficient workforce.
One of the key factors behind the reduced attrition rates and increased savings lies in the rising efficiency of data analytics systems when it comes to HR operations
The predictive analytics systems in place today can give early warnings up to 6-8 months in advance and are up to 82% accurate in their warnings.
Such stellar numbers give the companies the confidence to build their retention strategies based on the analytics based warnings and create succession plans in case of a change in personnel.
Using data analytics to reduce attrition
The way that data analytics tool work when it comes to attrition related operations is not that different to other implementations of the technology. It is with these very steps that companies are able to garner actionable insights for talent retention.
Data Collection: For an effective analytical insight, it is important to use relevant and accurate data. Metrics like tenure, performance, engagement levels, feedbacks, and growth are crucial in evaluating an employee’s future stay within a company.
Gathering Insights: Once the data is collected and refined, it is passed through statistical models and machine learning algorithms. It is through these models that companies are able to find relationships between different metrics and how they pertain to employee attrition.
Retention Strategies: It is not enough to gather data and insights when trying to create a change. Any insight gathered from data analytical tools and methods is only as effective as the retention strategies created around them. This is where technology meets humans as HR professionals take the insights further to create a path that the company can follow.
In the end…
Through data analytics, companies are able to predict possible at-risk employees months in advance. The early insights allow companies to create strategies that reduce attrition and save recruitment costs.
The benefits of data analytics tools are indeed numerous and are certain to increase the efficiency of a company’s operations. However, like any tool, they are only as effective as their user.
For effective reduction in attrition using data analytics, give due attention to the insights and create solutions that tackle the cause rather than the symptoms. This, more than anything, is crucial for effectively increasing retention in your company.