Managing Attrition in the Indian Information Technology Industry

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Case Details:

Case Code : HROB071
Case Length : 14 Pages
Period : 1991-2005
Pub Date : 2005
Teaching Note : Available
Organization : -
Industry : Information Technology
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Combating Attrition

Experts are of the view that since the IT industry thrives on individuals with a vital knowledge base, the industry should help employees develop their knowledge base further in addition to giving them appropriate monetary and other compensation in order to retain talent. Combating attrition involves management of people and a thorough understanding of the human psyche. High levels of employee turnover occur due to a combination of various workplace environment influences and personal choices made by the employees. In 2003, a National Association of Software and Service Companies (NASSCOM) survey identified some of the major drivers of attrition (Refer Table I)...

Effective recruitment strategies can help organizations in employee retention. Companies following the traditional methods of recruitment observed that a major drawback of the traditional selection processes was either a poor response or a mismatch between company goals and individuals' expectations...

Compensation and Rewards
Incentives to employees play a vital role in motivating and retaining them in the organization. Compensation and rewards in the IT industry have long included a basic pay component along with a bonus pay when the company made higher profits. Later firms initiated performance based pay that rewarded the employee based on his contribution to the overall company profits...

Organization Culture
Studies and surveys analyzing the psyche of the employee have found that the work environment has a major impact on the behavior of an employee. An effective retention strategy would involve acknowledging the employee as the internal customer and aligning the organizational strategies with employee needs and wants...

Work-Life Balance
Employees differentiate a good employer from any other employer through the feeling of 'wellbeing' that is generated at the workplace. A balance between work and the personal goals and wants of an employee contributes positively to the retention of employees...

Learning & Growth
The dynamic nature of technology requires the IT industry to upgrade its operations frequently. So, another way to retain employees is to help them update their knowledge from time to time through training programs...

Surveys also identified poor leadership as one of the reasons for employee attrition. It was observed that leaders incapable of motivating and guiding employees pushed employees to change jobs frequently. Wipro initiated the 'Wipro Leaders' Qualities Survey' in 1992...

Emerging Challenges

By 2004, most Indian IT companies started positioning themselves as global firms. Many companies already had offices in foreign countries. For instance, Infosys had development centers in Canada, China and the Czech Republic...


Exhibit I: Indian IT Market 1997-2004
Exhibit II: Indian IT and Software Services: Export Revenue Ranking 2004-2005
Exhibit III: Attrition Rates of Indian Software Companies 2002
Exhibit IV: Overall Attrition Rates in the IT Industry
Exhibit V: Annual Demand for IT Professionals
Exhibit VI: Benefits of ESOPs
Exhibit VII: Organisations in India Offering ESOPs


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