The IT sector having a CAGR of over 24% in the last decade, has played a prime role in generating revenue

as well as in providing direct employment to around 2.3 million people in India. Indias value proposition, as an outsourcing destination, has been its productivity and the quality of work done. According to the industry body NASSCOM, Indian IT sector is estimated to provide direct employment to around 10 million by 2020. In FY 2010 IT sector has contributed around 5.6% to Indias GDP. Indias human capital advantage has been one of the prime reasons for the burgeoning growth of the IT sector. Post recession, the IT sector has seen tremendous growth and today the market has become extremely competitive. With other sectors also moving on a high growth trajectory, talent attraction and talent retention has become a major challenge for the employers.

Figure 1: Attrition Trends in different IT companies during 2010-11 Over the years, IT sector has been the most attractive sector to work in and thus has been attracting the finest talent available in the country. It provides an admirable work environment, attractive compensation and rewards along with good career growth opportunities. However the advent of economic downturn saw an adverse impact on the IT companies with most of them going for huge salary cuts, downsizing and tightening of perks. The rising salary levels in other sectors like manufacturing, financial services, FMCG has triggered a shift of interest among existing employees to these sectors. The attrition rate for IT companies was in the range of 14-25 percent for the fiscal year 2010-2011. Recruiting the right employees is a challenge but motivating and retaining potential employees is an equally important HR function. Selecting and retaining top performers is essential for business success and effectiveness. The scenario today looks quite complex on one hand with increasing work opportunities and seeking of talent by organizations and on the other hand, they find it challenging to retain these key employees. An increase in employee turnover means decrease in productivity, loss of expertise, lower quality thus leading to loss of business opportunities coupled with higher recruitment cost for the employer. Why employees leave? It is imperative for the senior management and Human Resources team to understand the reasons that lead to exit of top performers. This will help them to design and implement an effective retention strategy. However in most of the cases there is a disparity between the factors that employers assume to be most influential in driving employees to leave, and those factors that have actually caused respondents to leave the job.

Figure 2: Comparison of employers perceptions of reasons for leaving and employees actual reasons for leaving Comparison of employers perceptions of reasons for leaving and employees actual reasons for leaving show the top 3 reasons as: 1. Lack of opportunities for personal and career development 2. Issues with working experience 3. Salary & benefits Lack of opportunities for personal and career development clearly emerges three times as influential as any other factor in an employees decision to quit. Under this employee generally cites reasons like insufficient training opportunities, limited career development opportunities and lack of challenging projects. Issues with working experience mainly crop up because of a mismatch between the actual role offered and the employees expectations. Although salary and benefits is not a major reason for employee turnover, it surely adds to dissatisfaction if not met or if pay levels are below the market rate.

Figure 3: Early leavers, Top Performers and Universal Leavers The employees who leave their organizations can be classified into three categories: Early leavers Employees who leave the organisation within a year of joining and they constitute around 23% of the leavers in IT industry. This leads to an increase in training and recruitment costs because the managers have to continually train new recruits. The company needs to understand that early leavers would generally comprise of Gen Y who mainly switch jobs in search for their ideal role. At this level, a concrete induction course highlighting on What is in store for the ME? aspect would help in retaining employees for a longer tenure and thereby reducing undue anxiety. A huge chunk of people forming Early leavers leave in order to pursue higher education. The company can mitigate this by going for tie-ups with Universities in India and abroad to provide professional as well as certification courses. Top Performers These are the employees who quit after getting best performance evaluation and they form the major part (45%) of leavers. Their loss impacts the company in a great way because they are mainly responsible for the growth of the company. The company needs to implement a strong career development plan for them to keep them engaged in the organisation. Universal Leaders They comprise of about 32% of leavers and form the core of the company responsible for sustenance and daily operations. The company must ensure that it maintains cordial relations with them, leverage their expertise for mentoring the younger workforce and home in on them if they wish to come back.

Figure 4: Managing and developing Talent High growth in the IT sector brings along with it the problem of attrition in the foreseeable future. The need of the hour is to accept the challenge and see what can be done best to reduce the impact. An Employee-Employer friendly model needs to be developed that satisfies the needs of both sides of the coin. Employer needs include recovering training and development costs, ensuring maximum returns per employee and adequate manpower planning. On the other hand Employee needs include challenging work assignments, better career growth, enhanced job profile, commensurate compensation and due recognition for work done. The proposed Employee-Employer friendly model should formulate plans on the basis of tenure into Short and Long term and on the basis of usage into Mitigation and Contingency. Short Term Mitigation Plan Break Even Period This plan mainly focuses on employee retention for a specified period of time (Break Even period) so as to recover the initial cost incurred on the employee. The break even period can be calculated as shown below:

Figure 5: Cost Benefit Analysis and Calculation of Break even period So in order to retain employees for this period, companies can implement an Employment Bond for this duration and strict measures should be taken against employees who fail to adhere to this. Recognition of key performers

Key performers can be recognized by applying 80-20 rule and concentrating on retention of those 20% of employees who contribute to 80% of productivity. Short Term Contingency Plan This plan aims to provide a work conducive and fun filled environment thereby compensating for the social life affected due to the monotonous and demanding nature of job. It includes implementing following measures: Promoting work-life balance by launching flexible working hour policy. This can be extended to Work from Home for a short term which may be really beneficial for women employees who quit due to maternity and other family issues. packets. Initiate performance recognition programs and implement variable pay package based on performance. Offer benefits like sponsored vacations to ensure work life balance. Implement 20 per cent work policy that encourages employees to spend one day per week to research Health benefits including a physician and dentist available onsite. Facilities like yoga, free massage service, reading rooms, sport zones and recreation activities like video Child care centre and crche present in office premises. Onsite car washing, dry cleaning and laundry facilities. Flexible salary structure and policies like My Pay, My Choice that helps employees design their own pay individually selected projects funded by the company.

game arcades and pool tables.

Long Term Mitigation Plan This plan aims to help the management reduce the impact of attrition and ensures that the firm does not face long term losses. The following steps can be implemented: Implement an effective Hiring strategy that changes with changes in business dynamics. Define job roles that provide challenging, cutting-edge assignments and potential growth opportunities. Job rotation to prevent monotony and boredom to set in. Identify training needs and provide requisite training to key performers. Introducing transparency and clarity while documenting processes and jobs performed to avoid dependency Offering ESOPs to employees to build a sense of ownership and belongingness. Imparting Behavioural training by granting higher responsibility to key performers through enriched job Efficient performance appraisal systems to provide clarity about roles and responsibilities thus keeping the Involving employees in goal setting exercise and providing periodic feedback.

on an employee.

content and mentoring sessions with senior management. employees engaged and motivated. Long Term Contingency Plan This is an attempt by the industry to reduce attrition on the whole. Ensure a synergy with the government to improve quality of infrastructure, curriculum and teaching methods and also work with academic institutions to periodically update the curriculum and avoid obsolescence. This will ensure reduction in training costs since courses taught at academic level will be in line with industry requirements. turnover. Emphasis on bilateral agreements between companies with basic norms and ethics in place so as to avoid Expanding to Tier-2 and Tier-3 cities will help in increasing resource pool and thereby reducing attrition. Conducting Exit interviews will help in analysing various factors that lead to employee dissatisfaction and poaching of employees within industry.

Figure 6: Employee response post Exit interview The study shows that employees who received an exit interview while leaving the organization, left with a more positive opinion than those who did not. The positive opinion definitely helps in protecting employer brand and also retaining the remaining employees. Focussing on imparting education and fostering a learning environment for the workforce and treating employees at par with customers.

Future Outlook- Cracking the Retention Conundrum

High industry growth carries with it the risk of high employee attrition levels. Wage hike may be the only resort in the short run but the crux of the issue lies in the lack of inspirational leadership at the middle management level. This level mainly comprises of efficient, young operations managers buzzing with enthusiasm and a firm hold of the operating metrics. In this process to climb their way up the corporate ladder, what these managers have left behind them is the time for finer aspects of personal development like thought leadership. The need of the hour is an attempt by organizations to build on their Employer Brand Equity as well as focus on leadership coaching, mentoring and development to ensure that the industry is able to train and retain a strong workforce amidst a restless generation of knowledge workers.

References