Information technology companies in India are intensifying their employee referral programmes, besides doubling the referral money and other perks for niche, ‘hard-to-find’ positions, even as the IT industry is steadily treading the growth path post the economic downturn for almost 18 months.
For instance, IT, consulting and BPO services provider Cognizant’s employee referral programme Bring Another You (BAY) – which has been in place since the 1990s – launches a new programme every month involving novel referral incentive such as fly out on a vocation, win a brand new car and double the referral money. At present, referrals account for more than 40 per cent of its annual hires.
“One of the key decisions we took when we entered the downturn was to see employee referral as an opportunity to attract as much good talent as we could, while sustaining our industry-leading growth rate and preserving our cultural DNA. In the last 12 months from April 2009 to March 2010, notwithstanding the downturn, we saw the highest addition among our peer group, adding 21,800 professional to our global headcount and taking it from 63,000 in end of March 2009 to 85,000 by the end of March 2010. Employee referrals have been a key component of this,” says Satish Jeyaraman, director (human resources) of Cognizant.
But why employee referrals? Jeyaraman says employee referral programme sets in a multiplier effect, with each of the referred candidates becoming potential referral points to recruit other peers from the industry. Once on board, these candidates also exhibit greater bonding and display enhanced team spirit. Historically, at Cognizant, it has been observed that candidates who have joined the organisation through the referral programme stay on longer, especially at senior levels, than those who join us through other recruitment modes, he says.
“In BAY, each employee is encouraged to refer as many candidates as possible. The incentive ranges from Rs 5,000 to Rs 50,000 per candidate, depending on the level at which the candidate is referred and inducted. This programme is available across the globe and our employees in the US and Europe earn incentives in dollars and euros respectively. There are ongoing special referral campaigns where associates walk home with incentives such as i10 car, Kinetic bike, Samsung laptop, holiday packages to foreign destinations like Malaysia and Singapore for ‘hard-to-fill’ skills,” he adds.
According to Kishore Mohandass, head of operations and recruitment, Intelligroup Inc, the company's INTRO programme is a highly-focused referral programme and is currently contributing 32 per cent to its annual hiring as against 23 per cent in 2007.
“While cost effectiveness is the crux benefit, the methodology of referral payments brings in retention factor for both the associate and the person he/she refers. Besides, we were able to address nascent attrition through the employee referral process as the new hire is well inducted much before joining the company,” Mohandass says.
While the tie up of Intelligroup’s INTRO programme is through monetary rewards, the actual rewards for the employee are far more enriching. “Intelligroup employees get referral bonus which starts from minimum Rs 10,000 to Rs 40,000, depending on the role and the level,” Mohandass says, adding the company will be launching a new special monthly offer (for June) in a couple of days. "We are in discussion to fix up the process flow,” he says.
Things were not rosy for transport and logistics software solutions provider Four Soft Limited as its employee referral activity was slightly affected during the economic downturn, especially between the months of April to October 2009. “However, since November last year, hiring in general has been as per our usual monthly average. The referral programme is around 10 per cent of our total hires now but we expect this figure to reach around 30 per cent by next quarter,” says Partha Patnaik, general manager (HR and admin) at Four Soft.
Stating that Four Soft finds employee referral programme to be approximately 70 per cent cheaper than any hiring done through external executive search firms, Patnaik says the company would be adding 100 people to its current headcount of 650, most of whom will be hired through referrals.
Are there any flip sides to the employee referral programmes? Yes, says Sheeroy Desai, chief executive officer of the Professional Aptitude Council (PAC), an organisation that serves the industry and governmental leaders to promote global workforce meritocracy and quality.
“I absolutely say that employee referral programmes are coming back now and companies can drive more effectiveness through these activities. But the problem is, when the perks get too big, the programme gets hay wire, and people just start referring anyone to fetch themselves the incentives and thereby encourage nepotism and groupism.”
Agree Jeyaraman and Patnaik. “There is always the likelihood of a small number of employees misusing the facility. However, stringent processes like regular and exhaustive audits, and having a mandatory panel interview before the candidate is evaluated by the hiring manager will help curb any malpractices,” they say.
