Employee attrition continues to be a burning issue for top Indian software companies.
Except for Tata Consultancy Services (TCS), the others have reported attrition rates upwards of 14 per cent in the December quarter — much higher than a year ago.
Resignations continue despite efforts to improve employee morale. Mostly join a competing firm for a slightly higher salary, according to an industry source.
Most of the attrition is happening among lower-level software engineers, who have been taking advantage of opportunities elsewhere, including with US- and Europe-centric vendors building delivery centres in India.
Some pursue higher education to gain technology and management skills for career advancement, said Jennifer S. Hamel, Analyst, Professional Services Practice, Technology Business Research (TBR), Inc, a US-based research firm.
Service-delivery models require higher-level skills in emerging technologies and client management. There is also growing competition for talent from global IT services vendors, such as Dell and Capgemini, that are expanding headcount in India.
Training and performance incentive programmes will be the primary levers these vendors will employ to attract and retain top talent in 2014, she said.
Silver lining While attrition is hurting companies, it is a sign that the market is recovering. There are more opportunities and employees are confident of finding alternative jobs with better profiles and compensation, said E Balaji, an HR expert.
People tend to stick to their existing employers during downturns as other opportunities dry up, he pointed out.
While TCS reported the lowest attrition rate, Infosys reported the highest during the December quarter.
Company reactions Speaking to analysts, Ajoy Mukherjee, Head of Global Human Resources, TCS, said: “The kind of initiatives that we have taken and the overall business environment are definitely helping us in keeping retention levels (low) at this stage.” .
Infosys CEO SD Shibulal said that in annualised terms, attrition has gone up because it is a moving window. It does not reflect the current (December) quarter, but reflects the last four quarters.
“We have done an enormous amount of communication to our employees. We will continue to do this in the coming months and in the next cycle of promotions,” he told analysts.
“Attrition has been inching up a little bit over the last three quarters. Of course, the wage hikes will come in,” said Manoj Bhat, Deputy Chief Financial Officer, Tech Mahindra, speaking to analysts. “But I think from a business perspective, while we would like to bring down that number, the reality is our recruiting model and business model is resilient enough to manage this level of attrition.”
Anant Gupta, President and CEO, HCL Technologies, says the company wants to create ‘fungible’ skills to provide more sustainable careers to employees and make sure they hone themselves in more than one skill.