Why Labour Retention Is Now a Bigger Challenge

Introduction: The Great Indian Job Churn

India’s job market is facing a silent revolution. We’ve moved from a scarcity of jobs to a scarcity of people willing to stay in jobs. Here’s what’s happening:

Attrition rates have crossed 20% in IT, retail, and gig work
57% of Indian employees plan to switch jobs within a year (LinkedIn 2023)
Hiring costs are high, but rehiring and retraining cost even more

So, what’s going on? Why are people leaving faster than they arrive?

The Retention Crisis in Numbers

Industry	Attrition Rate (2023)
IT/ITES	21%
E-commerce	18%
Retail	24%
Gig Workers	40%+ (annual churn)

India is facing a silent storm in workforce retention across multiple sectors. According to 2023 data:

IT/ITES companies saw a 21% attrition rate, with talent constantly shifting to better-paying or flexible options.
E-commerce firms recorded 18% attrition, largely due to burnout and high operational pressure.
Retail stood even worse at 24%, as frontline workers seek more stability and benefits.
But the biggest churn is among gig workers, where the annual attrition crosses a staggering 40%.

Such high turnover means companies spend more time and money rehiring and retraining. It also shows a deeper issue: the lack of long-term growth paths, benefits, or emotional connection to work—especially in the blue-collar and gig sectors.

If India wants to build a reliable labour ecosystem, tackling this retention crisis is not optional—it’s urgent.

Why Indian Workers Are Quitting Their Jobs in 2025

India’s workforce is evolving fast. From blue-collar workers to office professionals, more people are quitting jobs than ever before — not just for money, but for respect, peace of mind, and better futures. Here’s a closer look at what’s really driving this shift:

1. Better Salaries Elsewhere (60%)

For a majority of Indian workers, financial stability is the top reason for quitting. With inflation rising and cost of living increasing, many feel that their current job doesn’t meet their basic needs.
👉 Whether it’s skilled masons getting better rates in a neighboring state or IT professionals jumping companies for 30–50% hikes, the search for better pay is real — and constant.

2. Lack of Growth Opportunities (45%)

Many workers feel stuck in dead-end roles. No promotions, no skill development, and no future vision.
Workers are now asking:

“Will I still be doing the same thing 5 years from now?”
“Is there any chance I’ll earn more, grow more?”

In both the blue-collar and white-collar sectors, lack of career progression is pushing people to look elsewhere — especially where learning and upskilling are supported.

3. Poor Work-Life Balance (38%)

Working 12–14 hour days with no weekends off is still a norm in many industries — especially in manufacturing, logistics, and construction.
People want jobs that respect their time, offer fixed hours, and leave room for family, rest, or side work. Without this balance, burnout hits quickly, and workers leave, even for lower pay, if the schedule is better.

4. Toxic Workplace Culture (30%)

A bad boss, unsafe environment, bullying, or zero recognition can drive any employee to quit. Sadly, toxic work culture is common — especially where workers are treated like machines, not people.

Whether it’s:

Supervisors shouting at labourers on site,
Managers micromanaging every move in an office,
Or salary delays and exploitation…

Workers are saying: “Enough is enough.” A culture of respect, safety, and fairness is now non-negotiable.

According to recent studies, a toxic work culture is one of the leading predictors of employee attrition, even more than pay. Read more in this detailed report by MIT Sloan Management Review:

https://sloanreview.mit.edu/article/toxic-culture-is-driving-the-great-resignation

5 Reasons Retention Is Harder Than Hiring

1 The Salary Paradox:

In India’s evolving job market, staying loyal to one company might cost you more than leaving. While job switchers often receive 30–50% salary hikes, those who remain in the same role typically get just 8–10% annual raises, if at all. This gap has created what’s now called the Salary Paradox—where loyalty is no longer rewarded, but financially penalized.

Startups and global MNCs are fuelling this trend, offering aggressive packages, sign-on bonuses, and flexible work setups to attract skilled professionals. Meanwhile, SMEs and legacy firms struggle to compete, bound by tighter budgets and slower promotion cycles.

Ironically, long-serving employees often discover that new hires earn significantly more for the same role. This fuels resentment and accelerates attrition, especially among mid-level professionals who feel undervalued.
In today’s market, switching jobs isn’t disloyalty—it’s often just smart economics.

2 The Rise of the “Gig Mindset” :

Young Indians are embracing a transformative shift in how they work: welcome to the era of the Gig Mindset. Instead of staying in a 9–5 job, many prefer flexible work—be it driving for Swiggy, freelancing, or taking weekend gigs. This reflects a deeper desire for autonomy, control, and variety.

According to a recent Livemint report, India’s gig economy grew to over 12 million workers by FY 2024–25, accounting for more than 2 % of the workforce. These jobs offer structured income mechanisms, visibility, and inclusion in the formal financial system, making gig roles a viable career choice—not just a side hustle (livemint.com).

In parallel, survey findings show that 70 % of Gen Z professionals are open to switching jobs within six months for better pay, driven by dissatisfaction with current salaries and stagnant growth opportunities (m.economictimes.com). Loyalty to one employer is no longer seen as virtue—it’s viewed as an economic compromise.

The gig mindset isn’t just a trend—it’s a generational shift. For India’s Gen Z, career success means freedom, purpose, and being financially smart—on their own terms.

3 Burnout & Mental Health Breakdown:

Burnout in India’s workforce is no longer a silent issue—it’s a growing crisis. A 2024 report by MediBuddy and CII found that around 62% of Indian employees experience workplace burnout—three times the global average of 20%—primarily due to stress and poor work-life balance (rpggroup.com, m.economictimes.com).

Gone are the clear boundaries of office life. The convenience of remote work has morphed into around-the-clock accessibility—and rigid return-to-office mandates have removed even the last semblance of flexibility. With no formal mental health support systems in place, workers are burning out—and often resigning just to survive.

According to another study, 88% of Indian employees are regularly contacted outside work hours, and 85% report this continues even during sick leave or public holidays. Many fear repercussions if they don’t respond—even outside official hours (m.economictimes.com).

This relentless exposure to stress, compounded by lack of support or boundaries, pushes many to make a painful choice: leave their job to save their sanity. For Gen Z and millennials, prioritizing mental health isn’t a luxury, it’s survival.

4 No Career Growth:

For many Indian professionals, the phrase “promote from within” often feels like a catchy slogan—not a real promise. Too frequently, companies fail to elevate internal talent, choosing instead to hire fresh faces for senior or specialist roles. This leaves long-term employees stuck in the same position, while external hires leap ahead—creating frustration and lost motivation.

The lack of upskilling and training only compounds the issue. As recent data from upGrad Enterprise shows, only 50% of employees in India received any workplace training in 2024–25, and just 16% underwent training every quarter (livemint.com). Without strategic investment in people, internal career paths stay stagnant.

Moreover, a 2025 ADP Research report found that only 37% of Indian employees felt confident they had the necessary skills to move up, and just 32% believed their employers were investing in their development (m.economictimes.com). This disconnect drives employees to seek opportunities elsewhere—not because they want to leave, but because they must.

A failure to support internal mobility and deliver meaningful growth opportunities results in a simple outcome: zero upskilling = zero reason to stay. Companies relying on external hiring to fill leadership or specialist roles risk losing loyalty—and key talent.

5 Toxic Work Culture:

Toxic work culture goes far beyond long hours—it’s the oppressive mix of micromanagement, favoritism, poor communication, and power games that drives employees out. A survey by Harappa Insights found that 58% of Indian professionals quit because of toxic bosses, while 54% blamed the broader workplace environment for their exit (moneycontrol.com).

In India, stories of abusive or neglectful bosses aren’t rare. According to Kickresume’s 2025 survey, 70% of respondents seriously considered quitting because of their manager’s behavior and 20% even cried at work due to pressure and mismanagement (kickresume.com).

The recent debate sparked by the tragic death of a 26‑year‑old EY employee highlights just how deadly toxic workplace practices can be. Anna Sebastian Perayil’s prolonged stress, late-night schedules, and tragedy ignited national outrage over the harsh fines of exploitative corporate culture (news.com.au).

Work-from-home vs return-to-office (RTO) policies added further fuel to the fire—removing flexible boundaries and creating new pressure points without improving support systems.

The Real Cost of Losing Employees

Rehiring costs ~1.5x the employee’s salary
Lost productivity during handover + retraining
Morale drops for remaining team (“Am I next?”)
Burnout spreads as others pick up the slack

Especially in tech and services, client trust can get dented when teams rotate too fast.

Retention in Labour-Intensive Sectors: A Bigger, Often Ignored Problem

Beyond tech and gig work, India’s real retention crisis lies in factories, construction sites, warehouses, and fields. These are the jobs that run our economy—but churn is extreme:

Many employers say they hire 3x the number of workers needed, expecting dropouts
Informal workers often leave due to lack of housing, safety, or timely pay
Seasonal migration leads to frequent exits during harvests or festivals
Workers often feel “used and replaced,” not trained or grown

This isn’t just a hiring failure—it’s a relationship failure. And it happens every day.

India vs. The World: A Quick Comparison

Issue	India	Developed Countries
Salary vs. Loyalty	30–50% hikes only by job-hopping	Higher base pay, but more retention bonuses
Formal Work Benefits	Low coverage, especially in informal jobs	Better healthcare, paid leave, ESOPs
Mental Health Support	Largely missing	In-house counseling, burnout leave
Gig Economy Growth	Rapid, with high churn	More regulated, still growing

India is facing the same talent war—but with far fewer retention tools in hand.

How Can Companies Improve Retention?

Pay Fairly, But Offer More Than Money:

Link raises to inflation + performance
Offer bonuses, ESOPs, and meaningful perks (remote work, education support)

Invest in Career Growth:

Set clear, fast promotion paths
Sponsor certifications (e.g. AWS, Coursera, trade licenses)

Fix Workplace Culture

Create anonymous feedback channels
Actively address bias, harassment, micromanagement
Make managers accountable for team attrition

Recognize & Reward Loyalty

Offer tenure-based bonuses (e.g. ₹1 lakh for 3+ years)
Spotlight long-serving employees with real rewards

Embrace Flexibility

Hybrid models (2–3 days WFH)
Gig-style roles for full-time employees
Short-term projects for younger or experimental talent

Conclusion: Retention Is the New Hiring

Hiring is the starting line. Retention is the race.

In a world where jobs are plenty but stability is rare, companies that value their people—not just for productivity, but for potential, will thrive.

Those that don’t? Will keep hiring… and rehiring… and wondering why they never grow.

So the question is: Are you building a workforce—or just filling seats?

FAQs

Which industry has the worst attrition?

Gig work tops the chart (40%+ annual churn), followed by retail and IT.

Do higher salaries guarantee retention?

No—without growth and good culture, people still leave.

Can startups compete with MNCs in retention?

Yes—via fast promotions, ESOPs, flexibility, and personalized growth.

Your Turn:
Have you quit a job because it felt like a dead end?
Or stayed because someone believed in you?
Share your story in the comments.

Why Labour Retention Is Now a Bigger Challenge Than Hiring in India

Table of Contents

Introduction: The Great Indian Job Churn

The Retention Crisis in Numbers