With hiring under way in the tech sector, attrition levels are likely to cause concern. While wage hike helps retain talent, it isn't the only ‘pull' factor, say companies..
“Managing attrition will depend on how a company took care of its employees in the downturn…”
T.E. Raja Simhan
Two recent news reports attracted much attention — even surprise — in the Information Technology industry.
Infosys Technologies and HP-MphasiS said they were hiring back the staff they had let go in the past. While Infosys called its initiative ‘Green Channel' MphasiS termed it ‘Homecoming.'
The IT and BPO industry is bouncing back — and growing alongside is the pressure to retain employees even as the demand for talent is set to pick up in the coming months.
While most companies recently announced wage hikes, will it help them retain talent? The answer from officials of leading IT and BPO companies seems to be ‘no' as it is just ‘one of the reasons' and not ‘the' reason why employees will stay with a company. In fact, attrition being a ‘sensitive' issue, some of the large software companies declined to comment on the topic.
“No matter what you do [this includes wage hike], the attrition level will increase for companies as the market will open up and there will be huge demand for people,” says Arup Roy, Senior Research Analyst at research firm Gartner.
Attrition will increase and touch the original levels of 18-19 per cent in IT and 20-25 per cent in BPO.
In 2008 end, the average attrition in IT services companies was around 18 per cent. In the last two years, during recession, it dropped to 9-10 per cent. With the recovery happening, it will cross the 18 per cent level, he says.
“Managing attrition will depend on how a company took care of its employees in the downturn,” says E. Balaji, CEO and Director, Ma Foi Randstad, part of the Netherlands-based Randstad, an HR services company.
Higher pay will continue to the prime factor influencing attrition but employees will also see how the company treated them during the recent downturn and how transparent the company was, he says.
A major concern
Som Mittal, President, National Association of Software and Services Companies (Nasscom), said “attrition will be a major concern for the industry with business coming in. With 13-15 per cent industry growth, attrition levels have crept up because of thin and almost critical strength on our bench,” he told newspersons of The Hindu group recently.
In the past, the bench strength was there and a lot of lateral hiring was also there. This year, the industry has hired a number of candidates from campuses and they have to be trained. In the next three-six months, things [attrition] will ease as the inflow is getting into the main stream.
“We are pleased that the industry and academia cooperated well and we had almost 100 per cent success in the eighth semester hiring, which happened in December and January.”
This year the offers made in campuses were about 1,50,000 and it is still going on. The industry will add around 2,50,000 (net) this year, he said.
Many factors at play
Yes, great companies are built for the good times and the bad. Downturns cannot be managed in isolation of the larger business cycles of which they form a part.
An organisation cannot look at people management during bad times detached from the culture and relationships that the organisation has built through good times, says Shankar Srinivasan, Chief People Officer, Cognizant Technology Solutions.
The US-based Cognizant, which has large development centres in India, was one of the top recruiters in the industry.
From April 2009 to March 2010 it added a net of 21,800 professionals. A month earlier, it announced 15,000 promotions across the globe for employees below the level of manager.
Cognizant too experienced an increase in attrition during the first quarter of 2010. On a trailing 12-month basis, its first quarter attrition was 12.4 per cent. For calendar 2009, the attrition was 10.3 per cent.
“We believe this pick-up in attrition resulted from a rapid return to hiring by many of our competitors, combined with a flushing of pent-up demand from those who were considering departing during 2009 but were unable to, due to the economy. The attrition was primarily at the junior levels,” says Srinivasan.
Compensation is only one of the factors that attracts and retains good talent in this industry, and it would be nearly impossible in the long run to attract and retain talent by virtue of higher compensation alone, he says. “We believe that retention is the by-product of the commitment and motivation that individuals have in an organisation,” he says.
There is a performance-based compensation in the company. Every year, the company surveys the global job market to identify the benchmarks set by top software organisations.
This research data is then mapped on to the aspirations of employees across levels to determine the pay structure and the array of benefits, he says.
A sign of growth
Deependra L. Chumble, Chief People Officer, Hexaware Technologies Ltd, says attrition is a sign that the industry is growing. The industry will experience a high level of attrition and it would largely be more at the beginner level as people in these positions always want to experience different roles, different organisations, and explore different career avenues.
Attrition will continue to increase on a larger scale as the markets open up. This trend can be seen mainly among employees with three-six years of experience.
Better pay packets alone do not help in retaining employees. Employees expect challenging work and a sustained career growth path as well.
The attrition battle can be won by focusing on retention, making work a fun place, having education programmes and ongoing learning for the workforce and treating applicants and employees in the same way as one treats customers, he says. In fiscal 2009, Hexaware's attrition stood at 19.4 per cent on an annualised basis.
Based on employee surveys/meetings and exit interview feedback it was found that lack of match between personal requirements and organisational culture was a prevalent reason for attrition.
IT professionals largely switch jobs for either money, career satisfaction or the opportunity to work with newer technologies.
An employee may be concerned and affected about the environment in the organisation, his compatibility with his supervisors, and career growth, he says.
Infosys opens ‘green channel' to woo former staff