Losing them young

THE HUMAN FACTOR

A mid-sized information technology company based in Hyderabad has lost 80 per cent of its junior software engineers in the last couple of months. But the CEO, who says he doesn't want to unwittingly groom generations of future leaders for a whole range of grateful multinational corporations, is not alone.

Giving him company "" though on a lesser scale "" are some of India's best-known software firms. Consider this: almost 60 per cent of the people who left Cognizant in 2003 were those who had spent less than 18 months in the company. It's the same with industry biggies like Wipro, which has seen its annualised overall attrition rate jump to 17 per cent. A significant percentage of the people leaving are "juniors".

The trend in Infosys is on similar lines. Says Hema Ravichandar, senior vice president and HRD head of Infosys: "Our attrition rates continue to remain one of the lowest in the industry and stood at 10 per cent for 2003. The maximum number of people who left us were employees with about one to three years of experience." However, Ravichandar says Infosys still remains the company of choice for employees "" a fact reflected in the almost one million resumes it received in the past one year."

HR heads of other software companies admit that attrition rates in the Indian software industry have hit new highs, but say that their focus is more on the senior- and middle-level employees, and the departure of juniors is "no big deal".

This is because there is no problem in getting good people at the entry level, what with the number of engineering colleges going up significantly over the past few years. The HR heads obviously have to don a public face to mask their private thoughts, but the problem of the good-old days of fancy salaries and multiple job offers is now getting real.

Management consultants explain this by saying that the past two years have been tough on the bottomlines of most companies, and many of them have had to trim back to the bare bones and ask their employees to do more with less.

The fatigue is clearly showing now, more so with the job market opening up. Phil Coding, an analyst who attended the 2004 Nasscom conference in Mumbai, quoted a top official of a leading Indian IT firm as saying that 65 per cent of managers from his company have not taken a holiday in four years!

The stakes are high indeed. Consider the cost of losing an employee "" even at the junior level. A lot is invested in such people in both training and exposure, and on an average, the cost of replacing an employee runs at about 120 per cent of his or her salary.

The other problem is getting good replacements at the entry level with a host of leading global firms ramping up their operations in India at a frenzied pace. The demand is enormous: third-party service providers like Accenture, IBM Global Services and Cap Gemini are expected to recruit more than 25,000 people in the next two years.

The result has been a huge increase in wage bills. According to the Nasscom Hewitt Total Rewards Survey 2003, entry-level salary was up by an average 24 per cent to Rs 2.67 lakh from Rs 2.17 lakh in 2002, and almost half the Indian IT and IT-enabled services companies position their compensation above the market median as a means of attracting and retaining employees. By all available indications, the amount is sure to see a huge increase this year.

The increase in salary levels is just part of the problem. The bigger issue is how to retain the talent through non-monetary rewards. Training is one answer, and Indian firms have a lot of catching up to do in this regard. India's software firms average six days per person per year training in a year. The comparable figure in multinational firms is at least two weeks training per employee.

The heartening sign is that innovative companies are getting the jump on the problem by taking proactive measures aimed at retention. Infosys' Ravichandar says her company achieves this by fostering a "spirit of learnability".

More recently, the company's key employee initiatives have been around three focus areas, the first of these being propagating a culture of empowerment, using channels like awards of excellence, an attractive variable compensation structure, and a role-based structure, which ensures that the best of talent rise within the organisation.

Internal communication is another focus area, and Infosys has always believed in the need to listen to employees, she says. The third key area is revitalising employee focus through regular fun and cultural events to foster a feeling of belongingness amongst the families of the Infoscions.

To some, these initiatives can often seem intangible or inconsequential. In fact, they are not.