An uncertain global economic environment, together with cross-currency fluctuation, has compelled employees to adopt a wait-and-watch policy, finds a new ASSOCHAM su
The attrition rate in the IT, ITeS and the BPO sectors has drastically fallen, to about 15-20%, during the last 6 months of 2012, as against about 55-60% during the corresponding period last year, apex industry body ASSOCHAM said, on Sunday.
The rate of attrition at all levels of organisations has seen a fall in the range of 45-50%, in the January-June period, 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 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 a talent crunch due to a shortage of competent managers at the middle and senior management for quite some time," said ASSOCHAM secretary general D S Rawat, while releasing the findings of the study.
"The global economic turmoil has led to a fall in hiring activities, and a high employee retention rate can been seen at almost across all levels of management. It has come as a blessing in disguise, considering that human resource is the key to the success of this knowledge-intensive industry," said Rawat, "Employees are wary of switching over jobs due to continued apprehensions of the economic slowdown being likely to continue for some more time."
For the study, ASSOCHAM representatives interacted with about 300 job consultants, recruitment professionals, HR specialists, industrial psychologists and administration officials, at various companies in IT, ITeS and BPO, at 6 leading centres ? Bangalore, Chennai, Hyderabad, Gurgaon, Noida and Pune.
Most respondents said that the global economic slump has played spoilsport to the aspirations of employees who have not been able to change their job due to unsatisfactory appraisals; many companies gave employees paltry hikes during the annual appraisal season.
Most of the attrition that happens in the IT industry is because of pay packages, followed by roadblocks in career growth, issues with the management and soaring performance-bound pressure, said respondents.
The ASSOCHAM survey further says that the fall in the attrition levels is proving to be fruitful for the organizations, which have been facing economic headwinds, since expenses incurred on the recruitment of new staff, together with their training and orientation processes, and, more importantly, the amount of time spent (on hiring), have come down drastically.
"The decline in the 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 Rawat.
"Rapid job switches may prove to be a disadvantage both for the companies paying higher wages and for individuals benefiting from higher wages in the short-run, as the rise in salary is not in keeping with the rise in knowledge and skill levels of the individuals," he added.
The survey also found that 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, they have also been doling out large salary hikes and promotions to put a check on the rising attrition rate, said respondents.
The attrition level is at a minimum of about 5%, among employees with a working experience of over 10 years; about 7-10% for employees with 5-10 years of experience; and 15-20% among employees with less than five years of work experience.
The attrition rate among young and entry-level employees is the highest, since they want hefty pay packages ahead of schedule, said many respondents.
In addition, the study found that companies have been expanding into smaller towns for cost advantages, and sharpening job skills of folks in tier III centres, where running costs are about 25% lower than in metros.
Besides, small centres help in serving 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 a advantage to their overseas' clients," said Rawat. (INN)