Severe downfall in attrition levels in IT-BPO due to global economic slump

Attrition rate has drastically fallen in the IT, ITeS and the BPO sector thereby coming down to the levels of about 15-20 per cent during the last six months of calendar year 2012 as against about 55-60 per cent attrition rate during the corresponding period last year,

Rate of attrition at all levels of the organisation has seen a fall ranging between 45-50 per cent between January-June, mostly due to a fragile global economy, according to a recent industry specific survey carried out by the Associated Chambers of Commerce and Industry of India (ASSOCHAM).

“An uncertain global economic environment together with cross-currency fluctuation has compelled the employees to adopt a wait and watch policy leading to a sharp decline in the attrition levels in the IT-BPO sector which has been grappling with talent crunch due to shortage of competent managers at middle and senior management for quite sometime,” said Mr D.S. Rawat, secretary general of ASSOCHAM while releasing the findings of the study.

“Global economic turmoil has led to a fall in hiring activities and a high employee retention rate can been seen almost across all levels of management and it has come as a blessing in disguise considering that human resource is key to the success of this knowledge-intensive industry,” said Mr Rawat. “Employees are wary of switching over jobs due to continued apprehensions of the economic slowdown being likely to continue for some more time.”

ASSOCHAM representatives interacted with about 300 job consultants, recruitment professionals, HR specialists, industrial psychologists and administration officials at various companies in the domain of IT, ITeS and BPO at six leading centres – Bangalore, Chennai, Hyderabad, Gurgaon, Noida and Pune to ascertain the extent of movement in the job market.

Majority of respondents in the aforesaid centres said that global economic slump has played a spoilsport to the aspirations of employees who have not been able to change their job due to unsatisfactory appraisal as many companies provided a paltry hike during the annual appraisal season.

Most of the attrition that happens in the concerned industry is due to pay packages followed by roadblocks in career growth, issues with the management and soaring performance bound pressure, said the respondents.

But, fall in the attrition levels is proving to be fruitful for the organizations facing economic headwinds as expenses incurred on recruitment of new staff together with their training and orientation process and more importantly the amount of time spent have come down drastically, highlights the ASSOCHAM survey.

“Decline in attrition level is a positive sign as frequent job-switching might prove to be fatal for the survival and growth of India’s BPO sector,” said Mr Rawat. “Rapid job switches may prove to be a disadvantage both for the companies paying higher wages and the individuals benefiting from higher wages in the short-run, as the rise in package is not keeping up with the rise in knowledge and skill levels of the individuals.”

Companies in the domains of IT, ITeS and BPO have shifted their focus on enhancing individuals’ performance and are providing adequate training and work experience to employees. Besides, companies are doling out large salary hikes and promotions to put a check on the rising attrition rate, said the survey respondents.

Attrition level is at the minimum of about five per cent amid employees with a working experience of over 10 years, while it was about 7-10 per cent amid employees having 5-10 years experience and it was about 15-20 per cent amid employees having less than five years’ work experience.

The attrition rata is maximum amid young and entry level employees as they desire to get hefty pay package ahead of schedule, said many respondents.

Many respondents said they are expanding into smaller towns for cost advantage and sharpening the job skills of folks in tier III centres with about 25 per cent lower running costs than metros.

Besides, the small centres help in serving the domestic financial services markets and provide lucrative opportunities in cloud and desktop management for small and medium sized companies.

“Expanding and relocating to smaller towns is a significant move by BPOs to provide cost advantage to their overseas’ clients,” said Mr Rawat.

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