ATTRITION: THE PRESENT SCENARIO

Indian economy is booming. Many Multinational companies are making their presence stronger because of the growth opportunities and available market in India. Low cost knowledge workers constitute our country to be one of the best preferred destinations for Multinational companies. With lots of MNC’s around, job opportunities are plenty, at the same time individuals leaving one company and shifting to another company are increasing. In simple, an employee leaving the organization is known as ATTRITION. Literarily it means “the reduction in staff and employees in a company through normal means such as retirement and resignation”.
Fresh graduates and post graduates are attracted towards huge salaries, infrastructure of international level and new working environment. Soon to realize, these factors are necessary but not important. What really important is a job which challenges them, where there is a scope for learning new skills and foremost the contribution that he or she makes to the growth of the company. Experienced individual leaves the company because of the poor reward, recognition system and role stagnation.
SECTOR Attrition %

Sales
36%

Banking and Finance
25%

Outsourcing
23%

Manufacturing
11%

Hewitt Associates, the Worlds foremost provider of human resources consulting and outsourcing firm have conducted a survey titled “Attrition and retention study Asia Pacific” in 2006. The main objective of the survey was to know the reasons “why employees leave the organization” and “what are the strategies followed widely to retain them”.

And the results are quite interesting; employees leave the organization because of:

Inequity of compensation
Limited growth opportunities
Role stagnation

And the study also found out that the top three strategies followed by many organizations in retaining the employees are:

Pay above market
Provide opportunities to learn new skills
Provide favourable work life balance

The survey was conducted in 170 foreign owned, locally owned and joint venture companies from China, Hongkong, India, Japan, Malaysia, the Philippines, Singapore and Thailand covering over 2,30,000 employees..

With rupee becoming stronger, the IT & BPO companies in India are forced to tighten the salary hikes. Now the situation is “You would get more only if you work more and perform better”. Salary cost is the biggest component of cost, accounting for 45% of IT Companies costs and 40% of BPO costs. So, now it has become a biggest challenge for HR professionals to retain the employees in the current trend. Finally, there is a desperate need for HR managers to identify the reasons for attrition before the situation reaching its climax, which is employees leaving the organization.


Source: http://www.hewitt.com/, http://www.indiabpo.com/ , http://www.answer.com/, HRD Newsletter (January, May, June, July 2007), Times of India (July 23, 2007). Image source: dqindia.ciol.com/2004/images/attrition_15april2k4.jpg