Tech Jam all dressed up and nowhere to go

Written by Debojyoti Ghosh | Updated: Nov 20 2012, 01:01am hrs
High attrition rates, which have been a major worry for Indian IT companies, have eased up during the September period. Low visibility of the business climate have made techies more risk averse, while companies too are going the extra mile to retain them

The sluggish global economy and foggy visibility into client spends have taken a toll on the job scene in the $100-billion Indian software exporting industry. Attrition rates at top-tier IT companies have dropped to their lowest levels during the quarter ended September for some, signaling a slowdown in hiring of mid to senior level tech professionals.

During the July-September stretch, attrition at TCS, the countrys largest IT firm, was at 10.2%, its lowest in several quarters. For Wipro there has been significant improvement in attrition, which was down to 14.6% from 15.6% in the preceding June quarter. On a last twelve months trailing (LTM) basis Infosys attrition fell to 15% from 15.6%, year-on-year (y-o-y).

Meanwhile, for HCL Technologies it stood at 13.6% as compared to 14% sequentially. Nasdaq-listed Cognizant, which has most of its software operations in India, saw annualised attrition come down marginally to 13% during the period from 13.4%, a year ago.

Experts feel with opportunities having dried up to an extent over the past couple of quarters, employees have become risk averse. In the current market, there are hardly any exciting job options available. With the uncertainty in the global market, people are not willing to switch jobs. They prefer to continue with larger IT firms, which have a stable business visibility, instead of experimenting with new jobs, says Amitabh Das, chief executive of recruitment firm Vati Consulting. Saurabh Govil, senior VP (HR), Wipro Technologies pointed out that attrition levels in the company touched a 36-month low during the month of September, which is reflective of the current economic environment.

As mature markets globally struggle to establish stability amid cutbacks by consumers, leaders of the Indian IT industry are beginning to feel the heat. In the last two quarters, software-services firms have witnessed a drop in volume growth and some have also shown the possibility of growth missing forecasts this fiscal. The Indian IT-ITeS industry earns about 75% of its revenues from the US and European markets.

The attrition rates have declined as the industry has been impacted by the political scenario in the US and slowing European economy. Employers and employees are being circumspect with regard to the turn of events and this has had a direct bearing on declining attrition rates, says E Balaji, CEO and MD, of staffing company Randstad India.

Although IT companies are attributing the decline to improved retention strategies and employee engagements, headhunters feel it is more to do with the current environment. Randstads Balaji notes that volatile market conditions and lower salary jumps given to shifting employees have made it easy for IT companies to control

attrition. But, HR managers should invest in employee development initiatives to keep their morale high. This will help in further controlling attrition over the next few months, he says.

As a retention mechanism, HCL Technologies, is relying on innovative platforms to engage and enable employees to contribute their ideas besides their professional growth. The IT firm has created an entrepreneurial culture for career development within the company. Retaining employees has become the most crucial challenge for companies in the IT sector. Compensation is not the only way for a company to make its employees feel valuable and wanted. The key to employee retention is to look beyond salaries, and move to smart people management tools and practices, says Naveen Narayanan, global head, talent acquisition, HCL Technologies.

To woo its work force, countrys third-largest IT company, Wipro recently granted 4.5 million restricted stock units (RSUs) to about 1,200 employees at the senior-management level. As part of its HR strategy based on a recurring two year plan, the IT firm issued RSUs effective October 1. As a retention strategy, Wipro is one of the first companies in India to issue RSUs, having previously granted a similar number to a particular band of employees in 2010. RSUs are given based on various performance parameters, potential, and role of the individual in the organisation, says Govil of Wipro.

IT major Infosys pointed out that to keep its attrition low it is investing heavily into employee engagement, empowerment, and training in terms of skill advancements, management and leadership capabilities. Infosys, which took a drastic step to withhold wage hikes early this year, announced salary increments effective last month. We have given a compensation increase despite a challenging environment. We are investing in our future growth, noted SD Shibulal, CEO and managing director, Infosys, during the second-quarter earnings.

The Indian IT-ITeS industry, known for bulk hiring, is seeing a decline in net addition of employees. With future business volumes appearing thin, IT companies are trimming their intake as they struggle with increasing benches.

However, some are of the opinion that hiring in the IT sector, which is going through a prolonged period of slowdown, is expected to see some uptick in the coming quarters. With the closure of the US elections, there seems to be a shift and companies are being cautiously optimistic. Job opportunities are opening up in this sector and this may result in a marginal increase in employee mobility in the coming quarters, says Balaji of Randstad India.

Recruiters feel there will be more selective hiring across the IT sector. There is a demand for program managers, as projects are becoming more complex. In the technical domain, e-commerce technologies including analytics and mobility are showing increased demand. Also, there is increasing adoption of temporary staffing to meet business requirements, he says.