businessgyan

Aug 15 2003

A poor second

Written by Jayachandran Pillai

Friday, 15 August 2003

Inability to retain and nurture employees may prove to be a big hurdle for the future of ITES

If you happen to open any newspaper I’m sure you will not be surprised to find some news about the ITES (Information Technology Enabled Services) Industry. But the high rate of projected growth put out by research firms would hold good only if the attrition rate in this industry is given a serious look. Other than the business performance being affected, a company suffers on the financial front too as a company looses a minimum of 2.5 to 3 times the salary of the candidate leaving a company.

Today, the attrition rate is anywhere between 25 per cent to 35 per cent in India and this percentage is going to go up further in the coming days if we do not soon curb it. In the US the attrition rate is as high as 70 to 80 per cent and in the UK it is 35 to 50 per cent.

Understanding this trend, the ITES team of Alp Management Consultants, did a survey on the attrition rate prevailing in the industry. To our surprise we found most of the candidates were more inclined towards the IT (software) industry as compared to ITES, which means given a chance most of them want to join a software firm than a call center company. So can we say that most of them see this industry (ITES) as a Poor Cousin of IT?

We also found that the major reasons for attrition are night shifts and overworked and burnt- out employees. There are other factors like employees going in for higher studies, lack of prospects and growth, salary and cultural issue.

The average percentage of women employee in most of the call center is about 45 per cent and they are more prone to develop health problems because of the night shifts. The time change causes biological upsets. Along with the night shifts, most employees suffer burnout due to over work and high pressure to achieve targets and deliverables set by the companies.

A combination of night shifts, work pressure and social pressure easily contributes 25 per cent to 35 per cent of the overall attrition in any company.

There are solutions to this problem also. A planned shift management system which takes care of rotation , calculating shift hours and giving adequate nigh day ratio shifts. There are software available which do all the required planning and calculations.

Also recruiting the right candidate is important. Hiring the very young with bare minimum qualifications means that they are most likely to leave for better prospects, higher studies or are using the job as a stop-gap arrangement.

In salary terms, a better way to attract and retain them would be giving them ESOPs and other long-term benefits with good training on a regular basis.

One could even have a psychometric test or similar appraisals to help the company understand the attitudinal and behavioral patterns of the candidates. This would be a costly affair but would surely give a RoI. These tests are being practiced by many organizations, and have reduced attrition to a considerable extent.

Today one cannot attract employees on the basis of work environment and infrastructure as most of them (long term players) are at par with each other. Some of them in India have even better infrastructure than in the US! Yes, location could be one of the reason, as they tend to migrate to the nearest company from their home to reduce travel time even though most of the companies provide transport.

Recently, to reduce the attrition rate, the Hyderabad Software Exporters Association (Hysea) drafted a Code of Conduct, which has a five –point charter, one of which says, “We will not hire anyone with less than one year in an organization”. This point forces me to ask a question as why should a young graduate from a good college stay in a company which does not show him any career growth. Hysea also says “a person who has served in more than three organizations will not be considered for an ITES job” – I feel these are quite impractical policies.

A similar exercise of no-poaching policy was initiated an year ago in Bangalore by most of the senior human resource managers from ITES companies. All of them gave in to pressure and hired people from their competitors. In a competitive environment, these policies and codes of conduct will not work. The smartest and the professionally run will survive!

In my opinion there are better ways to attract and retain an employee. This is not only a human resource job; even the CEO and business heads should put in an equal effort and initiative to come out with more innovative strategies.

(The author is the Co-founder of Alp Management Consultant Pvt. Ltd. The opinion expressed is of the author and is purely based on their survey. Send feedback to This e-mail address is being protected from spam bots, you need JavaScript enabled to view it )

Issue BG29 Aug03