The Hindu Business Line : CMC sounds alert over rising attrition rate

CMC Ltd, the Hyderabad-based Rs 615-crore software major, is seriously concerned over the increasing attrition rates, as the ability of any software company to execute projects and obtain new clients depends largely on its ability to attract, train, motivate and retain highly-skilled IT professionals.

In a draft red herring prospectus filed before the market regulator for enabling the Government to divest the remaining holding of 26.25 per cent in the company, CMC disclosed that its attrition rates had increased due to a highly competitive domestic and global market for IT professionals.

"Our attrition rates were 4.9 per cent to 5.6 per cent in the years ended March 31, 2002 and March 31, 2003, respectively. Our attrition on an annualised basis was 11.5 per cent for the nine-month period ended December 31, 2003," the company said.

CMC has disclosed that, "If we cannot attract and retain IT professionals, our ability to obtain new projects and expand our business will be impaired. Furthermore, our performance and response time in respect of existing projects could suffer, which, in turn, could attract claim for damages under the relevant contracts."

Further, the software major also made it clear that, "Wage cost pressures could result in our incurring increased costs for recruiting and retaining IT professionals. We cannot guarantee that we will be able to recover any such cost increase through increasing prices charged for our services ."