Info-tech

IT majors rejig retention strategy as more junior staff head for exit door

TE Raja Simhan Chennai | Updated on May 07, 2019 Published on May 06, 2019

Fresh graduates account for the bulk of the attrition which ranges between 15-20 per cent for companies like Cognizant, Wipro and Infosys   -  istock/PeopleImages

If acquiring talent is a challenge, retaining them is even more daunting as IT companies continue to grapple with the issue of attrition, especially among freshers who tend to leave the company in less than five years.

These relative newcomers account for the bulk of the attrition which ranges between 15-20 per cent for companies like Cognizant, Wipro and Infosys and about 11 per cent for Tata Consultancy Services (TCS).

This has forced companies to devise appropriate policies in a bid to arrest the attrition among freshers.

Infosys is rolling out an incentive scheme this year for employees who have excellent digital skills and Wipro has a ‘merit salary increase’ coming up in June to take care of the youngsters.

“Higher compensation or different kind of jobs are the biggest cause for attrition among youngsters with 3-5 year experience,” said UB Pravin Rao, Chief Operating Officer, Infosys, which had standalone attrition of 18.8 per cent in the March quarter, up from 17.8 per cent in the previous quarter. Discussing the March quarter results, he told analysts: “Earlier, the value proposition for youngsters was onsite opportunity. However, such opportunities are poor now. That’s another reason they move on to take up other options.”

Apart from rolling out an incentive scheme, Infosys it is also looking at an aggressive re-deployment of resources so that employees also get an opportunity to work on newer technologies.

“Some of these initiatives will take time to bear fruits but we are confident that over a period of time, the attrition would come down to a manageable 13-15 per cent level,” Rao added.

For Cognizant, the annualised attrition rate at 19 per cent was flat in Q4 but remains elevated. “We continue to focus on our workforce strategy and overall management,” said Karen McLoughlin, CFO, Cognizant.

Destination start-ups

Saurabh Govil, Head of HR at Wipro, told analysts that the company has a ‘merit salary increase’ coming up in June. “That’s the time when you really differentiate and take care of youngsters,” he added.

Kamal Karanth, co-founder of recruitment firm Xpheno, said: “The services industry has traditionally paid non-competitive salaries to freshers. After gaining experience, they do not want low wages. They now have better opportunities in the start-ups too.”

He said that to arrest attrition, companies should start with a higher salary base, have tie-ups with reputed institutes for higher education and offer more incentives for those at the bottom of the pyramid.

Abhishek Singh, Vice-President at the Everest Group, a research firm, disagrees with the view that lack of onsite opportunities causes attrition among youngsters.

“Jumping from one company to another will not satisfy employees’ on-site aspiration. The biggest driver of attrition is the low entry-level salaries,” he told BusinessLine.

When asked how TCS maintains a low attrition compared to its peers, Singh said: “When firms such as Cognizant, Infosys and Wipro focussed on building large campuses in select cities and concentrated their talent there (Bengaluru, Pune and Chennai), TCS continued to operate out of multiple leased premises across India.”

He added: “Staying close to local talent pools creates stickiness and leads to employee longevity.”

Published on May 06, 2019
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