ATTRITION IN INDIAN IT SECTOR

ABSTRACT

The word “Attrition” refers to scaling down of employees in an organization. It occurs because of
resignation, retirement or due to death of the employee. The employees leave the organization due to
many reasons like he may be getting high salary, higher job positions in some other company or he may
want to change his profession. Now a days IT industry in India is facing high staff attrition. Young talent
doesn’t stick to one organization for more than one year. Companies should have to be more careful
while hiring the staff. The job opportunities in Indian IT sector are more than the available employees i.e.
demand is more than supply. Due to high attrition rate, cost of the organization increases due to training,
development, socialization and also affects productivity and other costs on the employees. This paper
aims to explain why Indian IT sector is facing highest attrition rate and some of the remedial steps to
avoid or reduce the turnover rate.

I. INTRODUCTION

Attrition is defined as reduction in the number of employees through resignation, retirement or death.
The rate of shrinkage of number of employees is known as attrition. Attrition takes place due to non
fulfillment of employee expectation from the organization in return of services provided to them. The
causes of attrition in Indian IT sector may be either voluntary or involuntary. Attrition refers to the loss of
employees due to reasons other than firing and other employer-initiated events. The employer has no
direct control over how many personnel’s are lost to employee attrition. There are many causes of
employee attrition dissatisfaction with company, quit due to higher positions in other companies or may
be due to death. Attrition can bring losses to an organization as a whole. Therefore job attrition can be
very costly to the organization because it takes lot of time, efforts and resources to train and develop
employees, so that they work effectively and efficiently for that particular organization and in case
employees leave their jobs it cause great loss to the company because then they have to train another
employee with all the sources again. That is why attrition is very harmful. The attrition varies according
to the nature of business, the level of the employees and the nature of the responsibility shouldered by
them. The obvious, common and main reasons are the discomfort experienced by the employees and
the functional incompatibility between corporate management and the employees. Sometimes an
employee finds himself among colleagues and superiors he is unable to cope up with him. Or he finds
himself totally out of tune in his functions with the employee’s functional requirement, failing to rise to
the employer’s expectations. Another important reason is that the employee’s remuneration is not
voluminous enough to bear the brunt and cushion the con concussions of his family and social life.
RETENTION IN INDIAN IT SECTOR

Abstract Information technology is not just one of the fastest growing industry in India but it also plays a
major role in driving the nation’s economy onto a positive growth curve and has highly contributed in
changing India’s image from a sluggish developing economy to a global leader in technology on which
many countries can rely for world class technology solutions. With a highly competitive market and a big
requirement of IT professional it becomes very important for an organization to retain their best talent
to main the sustainability and productivity of the organization. There are two types of Employee
Turnover – functional and dysfunctional. When productive employees leave the organization, it is said to
be dysfunctional turnover and when the poor performers leave, it is called functional turnover. The focus
of this study was dysfunctional turnover. Dysfunctional turnover is the concern of HR managers. When
an employee leaves, it takes approximately eight weeks for this position to be replaced and in the
meantime, productivity suffers. Causes and consequences of the Employee Turnover are mentioned in
detail in this study. This study is an attempt to understand the impact of Retention Strategies on
Employee Turnover. Results of the study showed that Retention Strategies has an impact on Employee
Turnover. Other variables such as Welfare Benefits, Personal Satisfaction and Organization Culture, which
are said to be associated with the Employee Turnover, were also investigated as a part of this study.

INTRODUCTION

According to NASSCOM, $ 130 Billion can be reached by India in IT revenue by 2015, with CAGR of 14%.
With this, its contribution of annual GDP would be 7% which would create 14.3million employment
opportunities. The companiesrecruit potential candidates, provide them with good facilities and a good
pay but still face difficulty in retaining them. A huge amount of money is spent every year on HR policies
and Employee benefits so as to provide job satisfaction, but still many big companies have high attrition
rate. This study tries to find various reasons of high attrition and different strategies that can be
successful for Employee retention. The major objectives of the study are to determine: whether
retention management plays a positive part in retaining employees; contribution on lack of talent
management on employee attrition; and impact of various retention drivers.Collectively the study
indicates that retention strategies can only work well if the right candidate is hired at the first place and
also different retention need to be worked on carefully for different group of employees at all levels.

The term “turnover” is defined by Price (1977) as: “The ratio of the employees of organization who left
in a particular period of time with the average number of employees in that organization during the
same period of time”.

FUNCTIONAL TURNOVER:

Functional turnover occurs when people leaving the firm are underperformers. This is common in large
consulting, accounting and law firms that employ an "up or out" philosophy. Employees in such a
company must develop and improve to move up in the ranks. Those who are unable to progress are let
go. Consequently, these firms have high turnover, but the employees who remain are the best and
brightest.

DYSFUNCTIONAL TURNOVER:

Dysfunctional turnover is the exact opposite of functional turnover, as the best employees leave. This
can happen for a variety of reasons, but a common cause is low potential to advance. If, for example, a
company fills its management positions with external candidates and does not offer them to internal
employees, employees are likely to seek external opportunities for advancement.