India’s second biggest software services company Infosys Technologies Ltd on Thursday said its attrition rate for the October-December quarter has shot up on an annualized basis, but that it had added 5,311 employees to take its total headcount to 127,779.

The company said it hired 11,067 employees during the quarter but nearly 5,756 employees left the company for various voluntary and involuntary reasons, taking the net addition of employees to 5,311.

The attrition rate has gone up to 17.5 percent by December from 11.6 percent in like period year ago and by 0.4 percent sequentially from 17.01 percent at the end of the previous quarter (September), Infosys said in a filing with the Bombay Stock Exchange.

Infosys and its subsidiaries employed a total of 127,779 people as of December 31, 2010, as against 122,468 a quarter ago and 109,882 employees at the end of December 31, 2009, the company said.

“Our attrition has reduced. The employee engagement programme has shown good results. Employee referrals are at an all-time high. Lateral hiring are a record this quarter,” said T V Mohandas Pai, HR head of Infosys.

Attrition during the second quarter was 6,618 employees while net addition was 7,646 employees.

Employee referrals are at an all-time high. Lateral hiring was a record this quarter, Pai said in a statement.

“After the slowdown attrition went up. But, now this has stabilized and is not that big a concern. The industry has always been able to manage it,” said S D Shibulal, one of the co-founders of Infosys.

Infosys BPO, the company's back office subsidiary, lost 582 employees during the quarter, resulting in its total strength declining to 17,978 from 18,560 at the end of the previous quarter.

Hiring at entry level is not that difficult, but hiring experienced people is a challenge since we are picking up people from other companies. It is like a musical chair that goes on, Infosys CEO and MD S Gopalakrishnan said.