No slowdown in attrition yet for IT sector
SOURCE: The Hindu Business Line
DATE: May 25th, 2008
ARTICLE
When an industry faces uncertain times it is easy to assume that employees would typically stick around with current employers and not jump ship. But recent attrition numbers for a few companies, both big and small, in the IT software services industry show mixed signals. The context is that the industry is battling a spending slowdown in the US.
Attrition rate, in percentage, is the number of employees per 100 leaving a company. Some companies give out annualised numbers for the quarter while others give out rates for the trailing 12 months. The purpose of comparison now is not necessarily to pit one company’s attritions rate against another’s but to compare each company’s March 2008 quarter numbers against its own earlier performance.
Among the top six, only Satyam and HCL Technologies have seen declining attrition rates. For Cognizant, rates have remained stable between the December 2007 and March 2008 quarters but improved significantly compared to March 2007. TCS, Infosys and Wipro’s rates have either remained stable or shown a rise.
Among smaller companies too, there is no clear signal. Patni has reported consistently falling numbers while Polaris has shown the opposite trend. Mindtree’s numbers have remained stable.
Indicating that there certainly is a slowdown, however slight, in recruitment in the IT services industry, Mr E. Balaji, CEO, Ma Foi Management Consultants said, “Typically, employees from smaller companies tend to leave for bigger pastures if they sense that bigger companies are better placed to handle a slowdown. But there is always a time lag in these things. People would be applying the brakes now and the impact would be known in 3-6 months from now. Clarity would emerge after the June quarter results.” Some of his clients are already coming around to just-in-time recruitments.
Increment time Others point out that this might not be the best quarter to compare numbers. For, after getting their annual or semi-annual increments, employees are ready to look out.
Mindtree Consulting’s Head of the ‘People Function’ Mr Puneet Jetli said, “It is too early to conclude that the slowdown has anything to do with attrition.
“Software engineers are an optimistic species. They do not react quickly to such signals. And, this is not like 2000 — we are all still cautiously optimistic. Even the US hasn’t admitted that it is going into a recession.”
But he added that the environment has certainly cooled a bit with “increments this year hovering about 10-12 per cent instead of the usual 13-15 per cent.”
According to Mr R. Srikanth, Chief Financial Officer, Polaris Software Labs, the company has maintained a stable attrition rate in the last four quarters. He said, “It is now a bit easier to get experienced people. Probably some companies have more employees on the bench without projects and they start looking out for work that adds to their experience.”
