Module 3 : Retention
Managing attrition is the key challenge for all IT companies. With a highly skilled workforce and ample opportunities for global employment, the challenges for IT companies are countering the attraction of migrating overseas and the opportunity to earn at global levels. In the last year the attraction of start ups and dotcom companies has added one more dimension since venture capital funding is now more easily available. Entrepreneurship is especially attractive to a young workforce which thrives on challenges and excitement.
Attrition
The actual attrition in the last year have been lower than the previous year and were on an average about 14 %. However at the below three year level attrition was still about 20 to 25%. There is an anticipation that attrition will again reach the earlier levels of around 20% with the market picking up and new global markets opening up.
There is a much greater acceptance that attrition is a fact of the industry. Most companies had experimented with various strategies. A competitive compensation, often through retention bonuses and especially an aggressive ESOP plan that made earnings locally comparable with international earnings rate was seen to be the most successful retention strategy.
However there was a general acceptance that compensation and ESOP by themselves were inadequate since there was always bound to be a higher bidder for skills that were short. The importance of "emotional bonding", building pride in the organisation, providing an opportunity to keep up to date were all important factors that need to be addressed.
We have summarised some of the key retention strategies that have emerged. We have analysed these to draw strategies for companies in different situations. A combination of financial and qualitative factors is what finally enables companies to attract and retain employees.
