The Hindu Business Line : Might is right

The operative word is poach. Much like the food chain, where the small are gobbled up by the large, and the large by the larger, IT firms are fighting it dirty in the talent pool.

THERE'S this intriguing white board in the office of the human resources (HR) manager of a small software firm in Chennai. It reads much like a scoreboard: 10 left on Monday, 10 will join on Tuesday, 50 set to join in a week's time. Only the names of people change on the board, not so much the numbers. "This kind of board can be seen not only in my office but also in the rooms of a number of small software firms," says the HR manager.

Call it short-sightedness, but the fact is that the country's software lads, between 21 and 30, want to live like a king from the word go. They join an information technology (IT) company today and quit in a few weeks to join another for an extra buck. "Nobody can stop these guys," says the HR manager. "Small firms are the sufferers, losing good people to larger firms even before they (employees) can settle down in the company," he says, adding migration is particularly rampant in small firms.

He has this to say about attrition: "Don't talk about it. It is unmanageable. Losing people is routine in small firms, and if nobody leaves on a day, it is celebration time." This small firm employs about 300 professionals in Chennai.

Some employees quit for frivolous reasons. For instance, a project leader quit this small company because his parents happened to remark that many software professionals of his age in their neighbourhood had gone abroad while he hadn't. So he quit his company and joined a bigger one in the hope of an overseas trip after a few months. This is no isolated case, there are many such instances, says the HR manager. Employee attrition, a big cause for concern for small software firms, ranges between 15 per cent and 20 per cent - meaning for every 100 employees, 15 to 20 leave the organisation. "A company is not hurt because a certain person has left. The company is hurt because he/she takes away certain knowledge, and there is no ready replacement in the market," he says.

Attrition, as such, is not a bad phenomenon. It has been known to exist all along. However, when jobs were scarce, the technology change was less rapid. Voluntary attrition was small and companies managed it. However, with technology changing rapidly and manpower costs increasing, small companies do not think strategically in terms of recruitment, placement and retention. Attrition hurts them badly, and it is a strategic failure.

"Small software companies are today a good place for big players to poach on trained employees. We sow the seeds, and they (the big players) enjoy the fruits," says the HR manager.

Then how do these small firms attract and retain people? "It is like a food chain. As big players poach on our employees, we poach on smaller firms and start-ups. We also poach on computer operators from non-software firms and groom them into software professionals with a few months of training," he says.

Large players often use money power to lure talent from smaller players. Companies also use the `location' bait to attract employees, says N.V. Rajan, HR Manager at the Chennai-based Future Software Ltd. "We are aware that our employees are being poached/headhunted by our competitors just as much as we are in need of talent from theirs. Larger players have two factors in their favour — brand name, and, in most cases, an office in Bangalore. Both are difficult to compete with." The company's attrition rate is about 16 per cent, mostly owing to location preference and on-site opportunities with large multinational companies, he says.Attrition rate is a concern because in the software industry, knowledge workers are the most valuable assets and the amount of time, effort and money spent on training individuals is tremendous. While a certain percentage of manpower turnover is desirable to keep fresh blood coming in, and removing dead wood, higher percentages are definitely not good indicators of an organisation's culture and people practices, he says.

It is a challenge to find the right talent within constraints such as location, nature of work, compensation and benefits. Future Software has a recruitment team that networks with professionals in its domain and also utilises e-portals, he says.

According to Ranjit Pisharoty, Senior Vice-President (Technology), Lason India, a business process outsourcing (BPO) firm, smaller firms have more intensive training programmes, which is required to bring employees quickly `up-to-speed' and develop a hands-on attitude from a domain expertise perspective. For example, the concept of `bench' (employees without a project) is almost alien to smaller firms. Here, talented people get spotted faster, are nurtured better, and become important team members faster. This, often, makes ordinary people perform extraordinary work. And since, despite the extraordinary work, they do not have deep pockets, they are susceptible to migration, he says. A few years ago, an engineering traineeship or management traineeship was the order of the day in campus recruitment. However, today, but for a few large firms, campus recruitment or fresher programmes are no longer the done thing. Smaller firms have adapted to taking in and nurturing talent, keeping them productive for about 18 months to three years and then passing on a large proportion of the talent to large firms handling multi-million dollar projects. This is the `circle of life' as defined in terms of software and IT personnel. This is all the more evident in the IT-enabled services-BPO industry as the relative youth of its workforce and immaturity of the industry make for more early movers, says Pisharoty.

Is there a shortage of manpower in the IT and BPO industries? Absolutely not, it is only a myth, says Pisharoty. Thousands of graduates, including engineers, feed the industries, while a similarly large number of programmers get churned out. In fact, engineers performing coding/programming work, in the hope of using it as a quick stepping-stone for higher-level jobs, is a travesty seen only in India. So, for blue-collar work (coders/programmers/processing agents), there is no shortage, and enough of a talent pool for small and large firms to tap into, he says.

The major issues for smaller firms on HR include branding, perception and compensation. The branding of a blue chip or a multi-national company or a technology leader, together with innovative compensation packages, is a clear advantage. Deep pockets and campaigns do focus on world-class facilities and infrastructure, thereby putting smaller firms on the back foot. The perception that smaller firms could never offer these, that they have limited opportunities, may not be as technologically emancipated, and are organisationally less mature, has yet to be broken, says Pisharoty.

Asked for a headhunter's perspective on the attrition problems faced by smaller firms, Saundarya Rajesh of Avtaar Career Creators says there are smaller ITES firms that budget for anything between 15 per cent and 25 per cent of employee attrition. They take it as a business risk that their trained staff would leave within 12-18 months and make fresh careers in newer shores. Fresh graduates (freshers) joining small pharmaceutical companies make it a point to leave within the first year to join large multinational firms. They equip themselves not for performing their current job but for attracting a new one, quickly, she says.

"We are amazed at the number of young MBAs who have joined a second or third-rung employer (in their perception) from campus, and within just a couple of months have prepared their bio-data with the new designation and job responsibilities," says Soundarya..

Smaller IT companies need to pay greater attention to culture-building and talent transformation to plug employee exodus. This is relatively easy for small firms since the numbers are fewer. The success rates of retention programmes too are much higher for smaller firms if the management uses a direct, employee-focussed, approach and is ready to invest resources for the same, she says.

According to Soundarya, the hiring practices of companies are not based on size but on the type of clients that they service.

Some small companies service very demanding and discerning clients who expect nothing but the best of talent.

This is something that even larger companies do not insist on, at times. Many a time, there is migration from bigger companies to smaller companies too, mainly because of the prestige associated with a certain project or a particular client. Contrary to popular perception, several small IT companies are, in some cases, even better paymasters than larger brands, she says.

Anti-poaching initiatives

THE IT and BPO communities are planning initiatives to attract and retain talent. Companies are unanimous on one issue: the trend of attrition and poaching benefits nobody. The most important countermove would be to promote close bonding (as in a club) amongst HR personnel in the industry in a given city. Insisting on `relieving' letters, mutual respect for an `industry-agreed relieving period' and bilateral `no-poach policies' are steps being considered, says Ranjit Pisharoty of Lason India, who is also Convener, IT & BPO panel, CII-Tamil Nadu.

Another strategy could be to persuade companies not to entertain people who come with less than a year of productive employment with their previous employer. All these are initiatives on the anvil, he says.

According to Pisharoty, an employee changes jobs for many reasons. The job fit or cultural fit of a new employee, whether from a small firm or big, is dependent on a combination of factors, including personal ability, attitude, aptitude and aspirations of the person, the environment and culture at the new organisation, and how good a job the HR department has done with assessing and matching both. If the upstream process of recruitment works, the background from which a person comes is, by and large, immaterial.

Graphics: V. S. Wasson

raja@thehindu.co.in

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