Hiring back as attrition soars to prick IT firms

With the economy giving positive signals, hiring is back. However, so is attrition, with disgruntled employees demanding more or moving to greener pastures to make up for lost time and money.

Information technology-business process outsourcing employees were among the first to be hit by a sagging global economy because nearly 60 per cent of the sector's revenue came from the US, which reeled under the effects of recession. Many realised the tides were adverse and mentally adjusted to a regime of no pay hikes, while others silently bore wage cuts. Neither had any option but to wait for the crisis to be over. After nearly two years, this seems to have happened.

Figures tell the story. Attrition in IT services had dipped to 8-10 per cent in 2009. This year, the figures have begun rising and are at 15- 20 per cent. Attrition levels had peaked in 2007, when these were at 20-25 per cent for most companies. BPO firms, historically, have higher attrition, ranging between 25-60 per cent.

As Indian IT firms see more business deals clicking, analysts expect the attrition to rise further. Human resources (HR) experts confirm the trend.

Industrywide trend

India's third-largest IT services company, Wipro Technologies, had seen its attrition moving up to 17 per cent in the fourth quarter ended March 31. "The entire industry is now facing high attrition. We are taking steps, including providing employees with a proper career framework and engaging with them more and more," says Sourav Govil, senior vice president and HR head.

"There were visible trends since the past three to six months, as the economy started improving. People started looking at big jumps," said Shiv Agrawal, CEO, ABC Consultants.

HR experts also said many were considering moving because they were not treated well during the downturn. "Of the placements we have done, about 20-25 per cent  said the present company did not treat them well. We had an equal number of people asking us about the HR policies of prospective employers and how they treated their employees," said a senior executive of a leading HR staffing firm.

"Pay is only the hygiene factor in retaining the best talent. Besides that, we plan to retain employees through constant development. Technical people don't want to be obsolete and they need to learn a lot.

Also, we have a competence framework in place that checks them on their technical skills, behavior and supervisory skills," said Arvind Thakur, CEO, NIIT Technologies.

Bangalore-based MphasiS said attrition went up in the Jan-March quarter but again started coming down towards the end. "At one stage, it (attrition) was as high as 26 per cent in our IT services business," said Ganesh Ayyar, CEO.

Retention is key

A recent Ma Foi study said nearly 75 per cent of all jobs created in 2010 will be for experienced professionals. Thus, retention programmes will be key.

Mphasis is already investing in talent building and career management. "Twelve months back, we started high potential special talent management programme. We are putting special training programmes for frontline managers. We have special approaches towards top raters and top performers," said Ayyar.

"We plan to retain our best employees in three ways. We provide them with learning and development programmes to upgrade their skill sets. Second, we have talent management programmes in place that offer the right kind of training inputs to respective jobs and, last, we have equity performers in the middle management," said Rohit Kapoor, EXL's president and CEO.

At WNS, which saw accelerated attrition of 32 per cent last year, attention on retention is high. The new focus is on a clear strategic vision, talent management and enhanced investment in employees' learning and development programs: these have created excitement and are working more effectively than any specific retention policy, says the company. All leaders have been asked by CEO Keshav Murugesh to spot talent and grow leaders from within into the new roles being created.

General hiring takes off

Meanwhile, IT-BPO apart, a survey by Mercer, the global human resources consultancy, shows companies have begun new hiring in general, as opposed to just filling vacancies. New employees should comprise 6-10 per cent of the total workforce by the year-end.

Also, companies are increasingly looking at Tier-II institutions for hiring freshers. The investment in newly-hired training remains the same for recruits from both Tier-I and Tier-II institutions, even with a higher pay level for recruits from Tier-I places

The findings revealed more than 80 per cent of the firms surveyed would be recruiting in 2010 and 76 per cent had already hired employees in the first quarter. The report said two-thirds of companies in the IT, telecom, chemical and pharmaceutical sectors planned to hire, compared with 80 per cent of organisations in manufacturing and automobiles.

"An overall salary growth forecast of 11.6 per cent is expected in 2010, compared with 8.7 per cent in 2009. Most sectors are looking at double-digit increases for the next year," said Gangapriya Chakraverti, India business leader with Mercer's Information Product Solutions.