High attrition rates leave small IT cos in lurch

The IT companies, which have been grappling with problems such as slowdown and technology obsolescence, are now encountering a different sort of problem.

The attrition rates (the rate at which employees leave the organisations), which were at very low levels till recent times when the tidings were not so good, have suddenly surged up leaving the IT companies high and dry.

It is especially tough time for the small and medium-sized companies to retain people with better skills.

"Though it was not the revision time, we had to hike salaries of our technical staff by 30 per cent in October just to retain the best people," a CEO of a city-based listed company said.

The company, which has not been doing well for the last few quarters, is expecting things to improve in the coming quarters and the worst thing it expects at this juncture is losing some of its critical mass ( read : its product development team).

Interestingly, the employee stock options are in limelight once again, thanks to the bull-run in the stock markets.

Bigger companies like Satyam, Wipro and VisualSoft are happy to see the stock prices surging up because their employees are quickly exercising the stock options, ensuring their employers that they have long term plans to stay-put with the companies.

But it is the small and medium-sized entities which are bearing the brunt because this time the stock markets are not so generous that every Tom-Dick-and-Harry software scrip is not running up and agile and only fundamentally strong ones are moving up.

Naidu's diktat to banks

After successfully helping the privatisation proponents in liberalising the erstwhile monopolies "� VSNL and BS N L "� chief minister N Chandrababu Naidu seems to have trained his guns at the public sector banks.

At the State Level Bankers' Committee (SLBC) meeting held in the city on Monday, Naidu flayed the regional rural banks, which are sponsored by the public sector banks, for not providing loans to the farmers at government sought interest rates.

He rejected the argument of RRBs that since their cost of funds is higher, they cannot afford to lend their funds at the government-prescribed rates.

"When I was asking the BSNL and VSNL to reduce the tariffs, they too were arguing that they had huge liabilities and cannot afford. However, now you see after competition was introduced, they are reducing tariffs every week," Naidu alerted the RRB to a similar possibility, stating that they might lose their monopoly in their designated service areas. Banks must be careful now, because Naidu is now watchful about their monopoly in the rural areas.