Losing a great employee at the worst possible time can feel like a gut punch. The uncertainty it creates can be frustrating.
Beyond the immediate panic of filling the role, you might ask: “What could we have done to prevent this?” and “How much is this going to cost us?”
These questions signal how important it is to understand employee turnover, especially in the tech industry, where the rate is significantly higher than in other sectors. LinkedIn puts the turnover rate in the tech industry at around 13%,¹ a figure that, if left unchecked, can gradually wear down a company’s momentum and growth.
Read more on: 9 IT Staffing Talent Trends that Will Dominate this Year
What Is Employee Turnover in IT?
Employee turnover is when workers leave your organization over a given period. To put things into perspective, if you have 100 IT staff and 10 of them quit (and are replaced) in a year, you’d have a 10% annual turnover rate.
Turnover includes departures for any reason – from people voluntarily resigning for a new job, to retirements, layoffs, or terminations – but companies are mainly concerned with voluntary turnover (when employees choose to leave on their own). After all, losing a talented person who wants to leave is a sign that something might be wrong, and it often comes with significant costs.
Some turnover is normal, even healthy. Not every hire is a perfect fit, and occasionally, people move on for personal reasons outside of work’s control. But when too many people leave too often, it becomes a problem.
The Real Costs of Tech Turnovers
When skilled professionals leave, the cost to the organization is far more than their salary. The actual cost of turnover lies in many indirect impacts that can hurt your team and business.
1. Financial Costs
Every time someone quits, it hits the company budget. Consider the following expenses involved in replacing an employee:
- Advertising the job
- Recruiting
- Interviewing candidates
- Background checks
- Signing bonuses
- Relocation costs
- Training the new hire
These add up fast. According to Gallup, replacing an individual employee can cost anywhere from one-half to two times the person’s annual salary.²
In a real scenario, if an employee earning $60,000 per year leaves, finding and training a replacement might cost around $30,000 to $120,000 (or even more for specialized roles).
Why is it so expensive?
Some costs are direct and easy to see on a balance sheet—for example, agency fees paid to find candidates or the salary paid to a trainer or a trainee who’s not fully productive yet. But equally significant are the indirect costs.
Only 30–40% of turnover expenses are “hard costs” like recruiting fees; the other 60–70% are “soft costs”.³ These soft costs include the time managers and team members spend interviewing candidates, the hours others spend covering the workload until the position is filled, and the lost productivity as a new hire learns the ropes.
When a position is vacant or a newbie is still getting up to speed, the team’s output suffers. It often takes months for a new employee to reach full productivity. During those first months, a company spends resources on someone who isn’t yet contributing at 100%.
Consider this painful reality: about 30% of new hires leave within their first 90 days. This means many companies never recoup their initial hiring and training costs before the employee leaves again! It’s a vicious cycle—and an expensive one.
2. Emotional and Cultural Toll
Financial costs are just the beginning. When a team member leaves, it also takes a toll on the colleagues and the workplace culture they leave behind. These are the “hidden” costs of turnover –harder to quantify, but can be felt through:
The Impact on Other Employees
Losing a coworker (especially a well-liked or key contributor) can be emotionally difficult. It may create anxiety, leading employees to wonder, “Why did they leave? Is there something I should be worried about?” or “Will I have to take on extra work now?”
Often, the answer to that last question is yes—at least temporarily, others will have to pick up the slack. That additional workload can lead to stress and burnout, and no employee likes being overworked.
If people are asked to shoulder too many extra tasks after someone quits, resentment can build up. They might feel unfairly burdened and unappreciated, which tanks morale. And if morale isn’t addressed quickly, it can lead to even more turnover.
The Impact on Company Culture
Culture is essentially “how we do things here,” and the shared values and norms of the team. High turnover can chip away at those shared norms.
For instance, if experienced workers (culture carriers) keep leaving, it’s harder to maintain the traditions, habits, and institutional knowledge that define the workplace vibe. Moreover, frequent goodbyes can create a perception that the company isn’t a great place to work, and that perception spreads.
The bottom line is that your team’s emotional well-being and cultural health are critical assets. Turnover puts those at risk, and when they suffer, the damage shows up in everything from employee engagement to customer service (even if it never shows up directly in an accounting ledger).
3. Operational Disruptions
Beyond money and morale, excessive turnover also hurts the day-to-day running of the business. When an employee leaves, especially a skilled or experienced one, they take with them a wealth of institutional knowledge. These are the know-how and relationships that aren’t written in any manual.
Perhaps they were the only ones who understood a certain legacy system in your IT department or had a special rapport with a key client. Suddenly, that expertise is gone. The loss of an experienced employee can create expertise gaps in your organization, which can be challenging and costly to fill.
It can even cause work to slow down on certain tasks that the departed employee handled. Even when you hire a replacement, there’s an inevitable learning curve. During that ramp-up period, mistakes are more likely as the newcomer gets up to speed.
Retention Strategies to Prevent Excessive Turnover
The good news is that employee departure isn’t an untouchable fact of life—in many cases, it’s preventable with the right approach. One such approach is strategic workforce planning.
Below, we break down four practical workforce planning strategies that can mitigate turnover.
Succession Planning
Succession planning means always having a plan for who could step into your most critical roles if someone leaves. Imagine a key manager or highly skilled employee suddenly departing—without a succession plan, projects can stall, and teams scramble to adapt.
Succession planning involves identifying and developing internal tech talent to fill key positions when needed. This ensures business continuity (no frantic rush to find external hires) and preserves valuable know-how within the team.
Internal Mobility
Internal mobility programs encourage the hiring of existing employees through promotions, lateral moves, or new project assignments.
This people-first strategy recognizes that many employees quit jobs because they feel stuck or underutilized. By contrast, if your team members can find their next challenge inside your organization, they won’t have to look elsewhere.
Data backs this up: workers who make an internal move have a 64% chance of remaining with the company after three years, versus only 45% for those who stay in the same role.⁴ In other words, providing career progression boosts loyalty.
Moving someone up or into a new role internally is also far cheaper than recruiting externally. You save on job ads, lengthy onboarding, and the “learning curve” time a new outsider would need.
Related reading: Aligning IT Staffing with Business Expansion: 5 Strategic Steps to Build Scalable Tech Teams for Hypergrowth
Retention Forecasting
What if you could anticipate who might leave and address the issue before it happens?
Retention forecasting is the strategic use of data and insight to predict turnover risks. This can involve analyzing indicators like declining performance, decreased engagement survey scores, absenteeism spikes, or even life events (for instance, an employee finishing an advanced degree might be looking for a promotion).
By identifying patterns or red flags early, managers and HR can intervene with solutions to re-engage those employees. For example, if a typically high-performing team member shows signs of burnout or dissatisfaction, a manager can step in with support: maybe discuss a career growth plan, adjust workloads, or offer a mentoring opportunity.
Intentional Hiring
How you hire those new team members can either set you up for stability or lead to more turnover down the road. Intentional hiring means being strategic and patient in the hiring process, focusing on long-term fit and alignment with your organization’s values and goals, rather than looking to hire quickly.
In practice, this might mean “hiring slow and smart.” Instead of rushing to grab the first available candidate who meets the basic qualifications, you take the time to find someone who not only has the skills but also meshes with your team culture and has the potential to grow with the company.
Hire intentionally with C4 Technical Services.
If you’re looking to build a stronger, more stable IT workforce—one that’s engaged, aligned, and ready to grow with your company—we’re here to help. Whether you need permanent placements, contract-to-hire solutions, or payroll services, let’s talk about how we can help!
References:
- Lewis, Greg and Sorongon, Joseph. “Industries with the Highest (and Lowest) Turnover Rates” LinkedIn, 11 Aug. 2022, www.linkedin.com/business/talent/blog/talent-strategy/industries-with-the-highest-turnover-rates
- McFeely, Shane and Wigert, Ben. “This Fixable Problem Costs U.S. Businesses $1 Trillion” Gallup, 13 Mar. 2019, www.gallup.com/workplace/247391/fixable-problem-costs-businesses-trillion.aspx#
- Navarra, Katie. “The Real Costs of Recruitment” SHRM, 11 April 2022, www.shrm.org/topics-tools/news/talent-acquisition/real-costs-recruitment
- Borden, Taylor. “Internal mobility could be the key to employee retention — and other happenings in the world of work” LinkedIn, 16 Jan. 2023, www.linkedin.com/pulse/internal-mobility-could-key-employee-retention-other-world-borden?utm_source=share&utm_medium=member_ios&utm_campaign=share_via
