Dr Preetam Tiwari is the Cofounder and Director at IncubXperts. He helps build cross platform mobile apps and Web Solutions for Enterprises. In this article he writes about the challenge of attrition which the Indian Information Technology companies are facing.
After graduating as a Bachelor of Engineer with distinction from a reputed college .Anita Verma (name changed)got an offer to work in one of the leading Information Technology company in India with an annual package of Rs 5 lacs. The company where she was working had a huge campus, gymnasium, sports complex, swimming pool and all entertainment facility and a good HR policy.
Three years later, she decided to switch her job. She resigned and put her name in a job portal, announced her availability for other jobs in Linkedin and also on other employment portals. Soon she started getting interview calls. She appeared for her first online interview which went off well. Considering the fact that her salary was Rs 5 lacs in the previous job, the HR from company offered her an annual package of Rs 7 lacs. Anita informed them that as per her company rules, she has a notice period of 90 days. The new company emailed her their offer letter of Rs 7 lacs.
Ten days later Anita received another interview call from another big IT company. After the interview was over and the HR person asked about salary expectation. Anita said 9 lacs peer annum. When the HR person showed some reluctance, Anita showed her offer letter of Rs 7 lacs annual package. Now she managed to get an offer letter of Rs 9 lacs per annum from this company.
After four more such interviews and showing the last offer letter, Anita joined a big IT company with an annual package of Rs 15 lacs. A straight jump of nearly 200 per cent from her first job.
What Anita did is not an isolated case. In fact it is the trend among the employees of IT companies. Why is this happening? Because the Hiring budget of a company is always more than their Retention budget. And companies who are hiring are ready to pay good amount to poach an employee from another firm with better and juicier offers. This action of poaching other employees by dangling higher salaries is making the IT companies shoot themselves on their foot.
THE ILLUSION OF IT COMPANIES
Some companies have two months notice period and some others have even three months. The companies are under the illusion that 90 days notice period will deter the employees from switching jobs. This is far from the truth. In fact this is the Golden period for them as it enables them to give more and more interviews, stack up offer letters and get maximum mileage. This period should be cut down because, those employees who have decided to leave will leave anyway. Besides it is unlikely that those employees who have decided to quit will be sincere and loyal during their notice period,
The Indian IT sector has been dealing with an all-time high attrition rate – averaging around 25 per cent. This can be attributed to the shortage of digital talent, high demand for qualified professionals, and increased wages.
Most Indian IT services companies have reported a more than 20% employee attrition rate in the last quarter of FY22. While Infosys reported an attrition rate of close to 28% in the March quarter of FY22, Wipro reported an attrition rate of 23.8% during this period. It was upwards of 20% for most mid-tier IT services companies. India’s largest IT services company TCS reported an attrition rate of 19.7 per cent on a last twelve-month basis.
Studies have revealed that the average tenure of an employee in an IT company is between three to four years. After that they switch jobs.
When the Shiv Sena leader Eknath Shinde left Uddhav Thackeray and became a rebel Sena leader and then joined hands with the BJP and became the Chief Minister of Maharashtra, one joke in the form of Whatsapp meme in Marathi was circulating among the IT professionals . It said “Switch kelya shivay pragati hot nahi “( There is no progress without a switch).
In the wake of the pandemic, the IT sector witnessed increased demand and a boom in job markets. Many experts are of the opinion that demand for technology talent will come down in the coming quarters as the economic slowdown impacts IT spending.
The reasons why people are leaving their jobs are many. But the pandemic has snowballed this problem to a very big degree. We are in the middle of the “The Great Resignation’ which Anthony Klotz calls it Pandemic Epiphany.
Sparked by the Covid pandemic, The Great Resignation — which has already been happening in India for the last two years — is likely to continue in 2022 with a large number of employees planning to resign in the next six months.
Findings of a survey suggest that 61 per cent of employees in India are willing to accept a lower salary or forgo a pay rise and/or a promotion for better work-life balance, overall well-being and happiness.
WHAT SHOULD THE IT COMPANIES DO
- Competing to give higher wages than the rivals is a losing game for the IT companies. Instead, compete to give the best working atmosphere for the employees and good work life balance. Focus on creating the best possible work culture where performance is amply rewarded and non-performers get clear signal that if they do not pull up their socks, then they will be shown the door.
- Toxic managers are a big problem in the business world. They are rotten apples who destroy the fabric of the organization and are detrimental for productivity and growth. Many companies tolerate the toxic managers because they have a tendency to deliver immediate goals and meet the sales target. But these short term delivery of results come with a huge cost. They destroy the morale of the employees and drive them to look for other opportunities.
Finally I will conclude my piece with the advice given by British billionaire, entrepreneur and business magnate Richard Branson. He is quoted as saying “Clients do not come first. Employees come first. If you can take care of your employees, they will take care of your clients”.
