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Rukmini Priyadarshini

IT companies are firing on the twin engines of hiring and expanding. But this time around, there's a difference. Fancy paycheques may go out, and on their part employees are making sure of the finer points of the job. It's all about getting a true measure of things.

OPTIMISM in the IT sector is reflected in the scope and pace of hires and expansion plans being announced. Another part of this image though, is the difficulty in getting and keeping good people. eWorld looks at the scene as companies try to attract talent, retain employee goodwill and fight attrition.

The increased business opportunities in the IT services sector are also accompanied by pricing pressures. With their margins still under pressure, corporates need people but are exploring ways other than paying higher and higher salaries.

In the IT-enabled services or ITES sector though, rewards and compensations are still pretty much money-driven and salaries of over Rs 60-70 lakh for executives are pretty common - even in smaller outfits. Perhaps, more so in smaller operations! While the salaries by themselves may not sound remarkable in a corporate environment where millions of rupees are paid to top executives every year, the burgeoning ITES sector is still to prove it can deliver. The competition is forcing call centres and BPO outfits to consider alternatives to the inflated salaries.

Half the hires in most IT services companies today will come from campuses - that includes technical institutes and management institutes. The IITs and National Institutes of Technology and regional engineering colleges (RECs) are good hunting ground for engineering talent but many companies are looking at the second-rung technical and management institutes as well for campus recruitments. A number of companies, including Texas Instruments, Intel, TCS, Cognizant, Infosys, Dell, iFlex, Computer Associates, Motorola, Adobe, Hughes Software Systems, HCL Perot, Patni and Satyam, have committed to participating in the campus placement programmes of various institutes. Hiring in the ITES sector has been metro-centric but is now moving to B and C class cities. A large Bangalore-based call centre operation is considering a nationwide campaign in district headquarters across India as is a Gurgaon-based call centre as the race for talent hots up in league with corporate expansion plans, according to a placement consultant.

The numbers are in the hundreds and thousands as corporates plan expansions. Intel and Patni Computers are planning to hire 1,500 each while Oracle and Satyam are planning to add 2,000 and Cap Gemini Ernst and Young is planning to increase its headcount by 3,000. The call centre and BPO operations are also planning hires in the thousands, be they Indian or MNCs.

Playing the value card

Salaries are a major concern for HR managers and top management, given the pricing pressures that businesses face. Companies are now trying to work out recruitment and retention strategies that exclude grossly inflated paycheques.

These measures could range from role and career roadmap clarification at the time of joining to stock ownership plans, although only a minority of companies can command interest in ESOPs, to focus on physical and learning infrastructure in the company as well as growth opportunities. Wipro, for instance, which hires 70-150 management graduates every year, expects to hire in line with business requirements this year as well, according to Rajesh, Corporate HR Manager. "We try to reduce the disconnect between expectations and reality, when we hire someone. This is especially true with campus hires," says Rajesh. "A considerable amount of time is spent on pre-placement talks which will clearly articulate roles being offered, the qualitative and quantitative requirements to be met,'' he says.

In the mature IT sector, there is clear information on compensation, on paper and the actual take-homes that employees can expect. Benefits that are part of the employee's package but will not accrue to the employee on a monthly basis are delineated.

Says Anu Sharma, Head-HR, iGate Global, "Smaller organisations have the advantage of a lower ratio between senior managers and the ranks, which in turn lets the company pay greater attention to the individual, a greater role for the employee and better recognition of the individual's contributions.'' That is a major factor being considered by potential employees, she says. Indeed, there is a greater preference for larger roles in smaller companies among professionals with even a few years of experience, says Srini Nanduri, Director, RMA Vector, an executive search firm and placement consultant. According to him, potential employees go into considerable detail into the roles, functions and career roadmap in the organisation and many early to mid-career professionals opt for better roles and greater responsibilities in the smaller but more agile firms in preference to the large IT services behemoths or MNCs.

According to Arun Kumar, Senior Consultant, Personnel Search Services, higher visibility and flexibility predisposes potential employees in favour of medium-sized and smaller companies that have a compelling technological or business advantage. Considerations of the technological positioning as well as internal environment influence the choice of companies for employees, he says.

Further, there is a challenge and sense of achievement in creating a culture for an organisation, says Anu Sharma, which cannot come from joining the ranks of a global player or an established player in the IT services market in the country.

The BPO sector is getting its act together and unlike call centres in the past couple of years, is seeking professional managerial resources. But the pressure of too rapid growth - 100-150 per cent growth in some cases - will probably lead to quite illogical pay packets and hires, says Arun Kumar. Indeed, these organisations end up paying two-three times the salaries of larger, more stable firms - a vice-president in a 300-500 people organisation commanding about Rs 50 lakh a year while a similar post in more established firms could be drawing about Rs 25-30 lakh, he says.

The attrition factor

Attrition in these firms too has reached staggering numbers. Indeed, all the buzz around the industry will only lead to greater turnover, say experts. They say fresh graduates join call centres for a week, are absent without leave for a week while they try the work at another company and could even come back to work with lame excuses. The extreme pressure on getting people to keep call centre operations running smoothly frequently results in poor hiring practices. Indeed some placement consultants say attrition could be as high as 50-60 per cent in some outfits.

IT services firms and R&D labs expect a turnover of 12-15 per cent during the year. Says Pawan Kumar, Chairman and CEO, vMoksha, attrition is a fact of life and what is different about this is that while most employees left for jobs on H1B visas, now, there is much movement and activity among the outfits within India itself.

Wipro has an average attrition rate of 12-14 per cent, but with a very strong link between performance and reward, there is some desirable weeding out as well, according to him. While Wipro has a rather larger pool of resources to ensure projects do not get affected due to people leaving, vMoksha says that shadow resources of 10 per cent on every project has worked well for it in ensuring that there are no cost, quality and time compromises as far as the customer is concerned. "Companies must put in place retention practices and packages that exclude compensation to deal with the twin pressures of scarce talent and pricing pressures," he says. "Challenging work and learning opportunities for individuals, growth opportunities and individual development plans must be developed within the organisation to keep good people in,'' says Pawan Kumar.

For entry-level positions Wipro provides mentoring programmes, accompanied by regular surveys and interactions with managers so that there is greater understanding between the organisation and its employees, says Anu Sharma. There are also regular sessions where every team member gets to meet and talk to the top management, obtain information and direction on business decisions and strategies, says Anu Sharma, adding that such close connection with the organisation's goals helps the individual feel a part of Wipro - certainly, a necessary and desirable feature in an organisation of Wipro's size. There are also performance management reviews, compensation meetings as well as employee perception surveys to let senior managers keep a finger on the pulse of the people in their businesses and divisions.

Jobs at the entry-level in the ITES sector see a 53 per cent turnover while middle manager positions see a 25-27 per cent attrition, according to a study by Team Lease, an executive search and placement consultant, says Nirupama V.G, its executive Vice-President.

Since iGate is positioning itself as a BSP, "we are modelling out a virtual enterprise business," says Anu Sharma. "This provides us the latitude in building a technical platform encompassing transaction processing, sourcing business, sourcing clients and lets individuals be a part of running an entire business, effectively dealing with the monotony and unimaginative nature of work that is the burden of the ITES sector."

Compensation in the ITES sector is tied to the retention strategy, with retention bonuses tied to project completion, for instance. Several companies tie retention bonuses to the number of years the person stays in the company, with 10 per cent of the salary being paid as bonus at the end of the first year, 20 per cent at the end of the second year and so on, says Nirupama. In other companies, a percentage of the profits from each project or business is shared out among the managers at the end of the project, says Nanduri. That ensures the project or assignment, at least, is not disrupted by people leaving.

However, organisations are still working out how to ensure that the variable part of the compensation is a larger and larger part of the total pay packet while HR also tries to ensure greater retention by tying-in non-monetary rewards.

In the ITES sector, many companies are able to attract and keep people on the basis of the stock options plans they have on offer - especially if they have much of their growth ahead of them. In the IT sector, the small-mid-size organisations have it easier as they can tie in stock options as well as offer greater growth and opportunities for recognition, says Nanduri. Large companies no longer offer joining bonuses and no longer `pay what it takes' says Nirupama. Despite the difficulty in finding good people, large IT service companies have learned the lessons of the past and will not compromise on the quality or experience required in each skill set, says Arun Kumar. The current emphasis by employers is on competence in the business and technology domains, process and quality expertise and greater sympathy with customer requirements and competitive environment.

Thus, despite the improved job scenario, the enormous salaries of earlier days are not sustainable. Indeed, the rationality in pay packets is only rivalled by the ways in which employers and potential employees focus on challenging environments, greater responsibilities and a reward-recognition set up that tries to break away from the money factor.

priya@thehindu.co.in

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