IT attrition seen receding, thanks to slowdown in US

J Padmapriya & P P Thimmaya BANGALORE

The Economic Times.

LOWER attrition has come out as a silver lining for IT companies as they battle recessionary clouds in US markets and an uncertain business environment. Large companies may have been able to arrest attrition by 0.5% to even 2%, in some cases, in the first quarter in the backdrop of an overall depressed recruitment scene.
Employees are getting fewer job calls from headhunters and increments are projected to be ebbing, resulting in lower bargaining power. Besides, companies are being extremely choosy in recruiting numbers in a view to lower operating costs and sport a slimmer bench. Recruitment agencies say, just like water finds its level, perhaps expectations on salaries would be more realistic now besides discouraging the practice of job-hopping.

For most of the large IT services major like TCS, Infosys, Wipro and Satyam attrition rates are hovering somewhere between 11-20%. But anything beyond 25% reveals a danger signal. According to Angel Broking IT analyst Harit Shah, “There has been a general declining trend in attrition for most large companies. Steps like clear career paths have proved to be attractive retention techniques.”

Large companies are also believed to be insisting on signing bonds and taking deposits from rookie engineers to ensure that their huge training spending does not come to naught because of attrition. Most companies have to put their baseline engineers through three to six months of training to make them industryready. So, for that period, these employees do not enter the billable mode. These steps may have contained job-hopping and frequent changes at the fresher levels, an analyst said.

Says Satyam head (HR) S V Krishnan, the company may be able to see a decline of 0.5% in attrition numbers in the first quarter of FY09.

Typically, attrition is also lower during the first two quarters and peaks in third quarter as employees largely tend to factor in their increment levels before deciding on new offers.

The third quarter is also when campus engineers start joining IT companies in large numbers.Now, there has been a consensus that the salary hikes during this fiscal would in the range of 8-13% unlike the previous level of 10-17%.

The pressure on companies in retaining their employees is the highest when there is higher demand for offshoring and outsourcing. By and large, the smaller and medium companies pay a premium to get people from the large firms.

Though, companies have found that the largest movement of people is in the work experience of one to five years and attrition rate stabilises after that period. At the same time, they are not expecting any major drop in attrition rates as there is still a strong demand for experienced professionals.