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L.N. Revathy

Coimbatore , Sept. 7

INDIAN software companies and MNCs that have set up shop in India both appear to be on a recruitment spree.

While the former is looking at tapping talents from educational institutions apart from the lateral entry picks, the MNCs obviously are eyeing those from within.

The timing, incidentally, happens to be perfect.

Software professionals who were forced to remain content with the job on hand in the last two years because of the general slow-down appear to be seeking a change.

The attrition rate that remained subdued in the last two years has started climbing northwards during the first quarter.

According to industry insiders, with MNCs like Accenture and IBM Global Services on a recruiting spree, the domestic players in the software services segment have started to feel the pinch, as the attrition in both large and mid-sized companies had gone up sequentially by 3-5 per cent.

Infosys, which had reported an attrition rate of 6.5 per cent for the quarter ended March 2003, found that the rate had swelled to 7.9 per cent in the subsequent quarter.

The same was the case with Wipro, where the rates had gone up from single-digit to double-digit (10.5 per cent) between March and June.

Both Infosys and Wipro had to field a flurry of questions on attrition in the recent earnings call.

Ms Hema Ravichandar, Human Resources, Infosys, termed this a cyclical phenomenon.

"Traditionally, Q1 and Q2 are periods when people leave for higher studies, so these are also times when attrition is slightly higher than the rest of the quarters."

But Mr Vivek Paul, Vice-Chairman, Wipro, was visibly perturbed.

"You know the fact that it has gone up is indeed concerning and we are taking a look at what we need to do to be able to retain our employees.

"I think that we are taking the necessary steps, but we do view the situation with concern, so we are trying to do what we can to protect it, but at 10.5 per cent it is not disruptive to business."

He added: "I think that what we understand is that while we have to be able to retain our employees, attrition is an issue.

"We have to make sure, particularly in our senior managers who guide the business and the middle managers who really handle the transitions, that we hold on to that group and that is the kind of way we are looking at it."

Mr Raman of Wipro conceded that attrition was one of the biggest challenges "because, rather than growing the employee base and training people to the global sourcing resources, the industry is focused on swiping people from each other, and that is causing a bit of an issue here."

If this is the case with top-tier companies, things are worse for mid-tier companies such as Polaris.

For Polaris, the attrition had gone up from 9.3 per cent to 14.3 per cent.

Mr Arun Jain, Chairman, Managing Director and CEO, said: "The last quarter has been a busy one and a very challenging one too. We successfully accomplished the task of communicating the strengths of the merger internally. However, attrition which has gone up five per cent needs to be better managed."

Industry experts are of the opinion that companies would not be excessively worried if people at the lower levels - with less than three years experience - leave.

The real cause for concern would be when people with more than four years experience start departing.

But large MNCs are currently targeting such people to put in place their senior management and middle management team and this could well shake up the marketplace in the quarters to come.

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