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Raja Simhan T.E.

Chennai , Sept. 23

ANITHA Rajagopal, an `Associate' with Cognizant Technology Solutions (CTS), earned about Rs 2 lakh in the last one year over and above her salary. Not by exercising ESOPs (employee stock options) but by using the company's `employee referral scheme'.

Having joined CTS six years ago, Ms Rajagopal has referred about 40 people so far, including classmates, peers from her previous employer and relatives who fit the company's requirement. The company has recruited 18 of them.The referral fee ranges between Rs 5,000 and Rs 50,000 per candidate selected, depending on the level at which the candidate is absorbed.

As the war for the best talent continues, IT companies adopt many methods to lure the best - through advertisements, job sites, campuses, consultants and recruitment firms.

But the `employee referral scheme' (ERS) seems to best suit both employer and employee.

"The ERS has helped us get the best talent referenced through years of association. It has helped CTS save recruiting costs significantly," says Mr Chandra Sekaran, Senior Vice-President.

CTS spends 10-12 per cent of the candidate's annual compensation as the `cost of search', and saves close to 50 per cent of that by recruiting through ERS, he adds.

Some 30 per cent of Infosys's recruitments come through the referral scheme.

The number of people hired through this programme has nearly doubled in the past two years, which indicates the level of employee confidence in the organisation, an Infosys spokesperson said.

Mr R. Shekar, Senior Vice-President and Head of HR, Corporate Strategy and Business Excellence, Polaris Software Labs, says: "The best recommendation about an organisation can come only from someone who is part of it."

Polaris has been using the ERS for the past 10 years. Around 20 per cent of its associate intake during the past two fiscal years came through referral schemes, he adds.

The biggest benefit of having an ERS is that the prospect has a good idea about the organisation, its workplace practices, and business prospects.

Further, the selection process becomes simpler due to the "cultural fit" of the prospect with organisational ethics and values, according to him.

TheERS helped CTS report higher levels of employee retention than the industry average.

For the fiscal ended March 2003, CTS had an attrition rate of nine per cent, of which four per cent was "involuntary" (had to leave for various reasons including under-performance) and five per cent left on their own.

This is among the lowest in the industry, Mr Chandra Sekaran says.

Historically, at CTS, it has been observed that candidates who came through the ERS stay on longer than those who join them through other recruitment modes, he adds.

Mr N.V. Rajan, Vice-President (Human Resources), Future Software Ltd, says that out of 477 employees, 30 per cent of the recruitment was done through ERS. The recruitment expenses through referral are 70 per cent cheaper compared to conventional hiring.

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