As Economy Strengthens, Indian Outsourcers See More Attrition

Ann All

Remember when employee attrition was a huge problem for Indian outsourcing companies? It's been a while. As I wrote in late 2008, "the slumping economy has apparently done what salary increases, training programs and other incentives couldn't: keep more employees of Indian outsourcing companies on the job."


The economy went even further south, of course, with many sectors shedding staff. According to a Hindu Business Line story, attrition levels at Indian services providers dropped to 10 percent or less during the recession, far lower than the 25 percent-plus levels seen at the same companies in happier economic times.


The article predicts attrition will again become a problem as the economy strengthens. It quotes Som Mittal, president of India's National Association of Software and Services Companies (Nasscom), who says:

Attrition will be a major concern for the industry with business coming in. With 13-15 percent industry growth, attrition levels have crept up because of thin and almost critical strength on our bench.

Cognizant Technology Solutions, a U.S.-based company with development centers in India, added 21,800 employees from April 2009 to March 2010. Also this spring, it promoted 15,000 employees working below the level of manager. But it lost some employees as well. Attrition in Q1 was 12.4 percent, up from 10.3 percent in the year-earlier period. Shankar Srinivasan, Cognizant's chief people officer, noted most of the attrition occurred in junior-level positions and attributed it to "a rapid return to hiring by many of our competitors, combined with a flushing of pent-up demand from those who were considering departing during 2009 but were unable to, due to the economy."


Outsourcing giant Infosys has introduced a program called Green Channel that is designed to lure back former employees, thus reducing the amount of time and other resources required to hire and train workers. According to the GoRumors blog, rival services companies Tata Consultancy Services and MphasiS are rolling out similar programs.


The attrition problem appears especially acute among project managers, according to an Economic Times article, which indicates attrition levels for those positions are as high as 40 percent. In some cases, project managers take junior members of their development teams with them when they leave one outsourcing provider for another, the article says. Compounding the problem is the relative scarcity of Indian professionals with project management skills.


The Economic Times piece includes this statistic from Nasscom: The Indian IT industry will hire around 90,000 recruits this year, bringing the country's total IT work force to some 2.3 million. In 2009, the industry added just 20,000 hires.

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Add Comment      Leave a comment on this blog post
Jul 8, 2010 4:26 PM Al Gibson Al Gibson  says:

Where is the economy strengthening?


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