Employee Attrition Research Indian ITES Co PDF

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Final Dissertation - Specialization in Human Resource Management on employee attrition in the ITes sectors...

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A Research Study

On

Developing a framework to understand retention strategies by studying the factors affecting Employee Attrition in Indian IT and ITES Companies

By Siddharth Pandya (2017)

Attrition and Retention Strategies of IT and Service Industry TABLE OF CONTENTS A Table of Figures B Table of Table C List of Acronyms D List of Keywords C Executive Abstract 1 Chapter One Introduction 1.1 Scope of the Study 1.2 Aim of the Study 1.3 Objectives of the study 1.4 Motivation behind the study 1.5 Summary of the motivational aspects: 1.6 Overview of key motivational factors 2. Chapter Two Literature Review 2.1 Brief overview of Various Authors on aspects of factors affecting attrition 2.2 Job Satisfaction and Attrition 2.3 Personal factors and Attrition 2.4 Job Content factors and Attrition 2.5 Availability of Job Alternative and Attrition 2.6 Organizational and Work Environment factors and Attrition 2.8 Cost of Employee Turnover (Attrition) 2.9 Importance of Retention 2.10 Understanding various Theories and tools 2.11 A look at Market Signalling 2.12 Understanding Culture web 2.13 Analysis and Evaluation of other authors‟ work in related areas of the study 3 Chapter Three 3.1 Research Methodology 3.2 Desired objective and Conclusion 3.3 Quantitative Research 3.4 The Sample 3.5 Target Respondents 3.6 Types of sample and methodology of data collection. 3.7 The Questionnaires 4. Chapter Four Findings, Observations, Analysis Derivations, and Study Verdicts 4.1 Analysis of the I.T Sector. 4.2 Analysis of the Service Sector 5 Chapter Five Proposed Framework based on the study 6.Chapter Six Conclusion 7. Chapter Seven Recommendations 1 Works Cited

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71

Bibliography

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Attrition and Retention Strategies of IT and Service Industry A Table of Figures Figure 1: Figure of motivational factors ........................................................................... 14 Figure 2: Highlighting the cost of Attrition ...................................................................... 23 Figure 3: The chain concept source (Dettmer, 2007) ...................................................... 26 Figure 4: Outline of the thinking Process: ........................................................................ 26 Figure 5: A look at Market Signalling .............................................................................. 29 Figure 6 Culture web source: (Gerry Johnson, 2008 ) ...................................................... 30 Figure 7: Graph showing satisfaction level ...................................................................... 40 Figure 8: Graph showing various loyalties ....................................................................... 42 Figure 9: Factors people look for in a new Job ................................................................. 42 Figure 10: Analysis of the important factors in an organisation ....................................... 44 Figure 11: Factors that retain people ............................................................................... 45 Figure 12: Satisfaction level of Employees in Service Sector .......................................... 47 Figure 13: Loyalty............................................................................................................ 48 Figure 14: Factors People look for in a new job ............................................................... 49 Figure 15: Analysis of important factors in an organisation............................................ 50 Figure 16 Cultural web analysis of Service sector............................................................ 51 Figure 17: Factors that retain people in Service sector ..................................................... 53 Figure 18: Goldratts thinking process in understanding Attrition .................................... 56 Figure 19: understand the basic framework ...................................................................... 63 B Table of Table Table 1 summary of the motivational aspects................................................................... 12 Table 2 Major factors that contributed to motivation ....................................................... 14 Table 3: Consolidation of references along with the evaluation and interaction with the study topic ......................................................................................................................... 31 Table 4: Satisfaction level of Employees.......................................................................... 41 Table 5: Satisfaction level of Service Sector .................................................................... 47

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Attrition and Retention Strategies of IT and Service Industry C List of Acronyms FB- Fringe Benefits Coll- Colleagues PO -Promotional Opportunity T&D-Training and Development Perf A- Performance Appraisal Work E- Work Experience ICO- International Career Opportunity SHWP-sympathetic help with problems TD- Tactful Descipline

D List of Keywords

Work life balance Treat as family member intresting work, carrer growth , working with great people , fair play and a supportive management strategic approach to retention organizational commitment and create learning organizations. right people non-financial reward Interpersonal relationship‟ Manage expectation. market location highly satisfied employees satisfaction with the work

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Attrition and Retention Strategies of IT and Service Industry

C Executive Abstract In an ideal world employees would love their jobs, their co-workers, meet the organisational standards, get appropriate remuneration and have a career path that is proportional to the tasks successfully executed in addition to a flexible schedule which can cater to their personal and family needs. This is in sharp contrast to the pre dominant code of employees leaving for better remuneration, working condition, policies and practices that lead to self actualization or in need of a proposed change A detailed introduction has been provided, explaining an overview of the study focus. The aim and objectives of the study have been clearly outlined. A detailed literature review has been carried out, quoting various other authors‟ works and the interaction with this study. The coherence of the study has been maintained in order to achieve the aim and objectives set. The study methodology section focuses on quantitative research, which supports the study. Questionnaires have been carried out taking into consideration a wide variety of respondents from various levels of the IT and ITES (service sectors) in Indian market to ensure collective representation. The questions have been designed to strengthen the study focus. The study tries to reinforce and unearth the factors that cause attrition. There are intrinsic and extrinsic factors that contribute to the overall wellbeing of an employee. The study focuses on exploring these reasons which might be unique to an individual or might be common to an entire spectrum of employee.

The ability to attract and retain people is rapidly becoming one of the key issues of human resource managers and their organizations across the globe. The study also tries to develop a framework to explain and conceptualise the factors that cause attrition and understand the retention strategies employed. The framework developed in this study provides enterprises with an innovative technique in understanding the complexities of Attrition and encapsulate the findings in a relative simple format

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Attrition and Retention Strategies of IT and Service Industry

1 Chapter One Introduction True potential of a company can only be met when there is complete synergy between the goals of an individual and the goals of a company. Every company aims at maintaining this intricate balance that is essential to its sustenance in a competitive market. Employment termination has detrimental effects on the company and the individual. With the advent of Globalization and the availability of opportunities has spurred a whole new trend of employee attrition. The current trend of leaving companies for better remuneration and professional development is considered normal and almost acceptable. Attrition has been the debate of various scholars and industry experts and there are various studies done to show the financial implications and loss of quality.

The Indian Market has seen a considerable change in the last decade and with Globalization was catapulted into a world stage. The market had to adapt and change at a drastic rate. The last decade has seen an increase in Global players in the IT and ITES (service sector). The availability of talent and cost effective labour has made India a choice destination for Global player. India has a large number of English speaking professionals that are churned out by its efficient education system.

The influx of global players has brought choice and economic prosperity and propelled it to world stage and brought about HR challenges. There were employment creation and increase in Standard of living and within a decade the industry skipped generations to be at par with Global arena. This brought about not only cultural shift from just a generation back where life time employment was considered normal. The new breed of professionals has the power to choose and is influence by variety of factors in selecting one organization over the other. Organization loyalty became a very fluid terms. This fluidity is recognized and given rise to employee attrition which many organizations have started to count as cost of doing business.

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Attrition and Retention Strategies of IT and Service Industry The alarming factor of the rate at which employees are leaving companies is a matter of concern. The study focuses on finding out the major factors of attrition and understanding the existing retention strategies and based on it develop a framework in understanding the complexities of this fluid term.

1.1 Scope of the Study The importance of Retention has been discussed and the methods and approaches subscribed by enterprises have been discussed. The study mainly pivots around the intangible facet (people) in enterprises. As discussed in the study methodology (section three), the respondents have been selected to achieve the aim. The scope of this study includes finding out the reasons for employee attrition in IT and ITES companies in India. The scope of the study also looks at existing retention strategies. The study also focuses on developing a framework

1.2 Aim of the Study The primary aim of this study is to have a look at the employees in IT and Service Sector and to unearth the main reasons for job attrition. The study tries to reinforce the value of best practices in enterprises to maintain the competitive advantage which often times is in the forms of Skills and knowledge the employees represent.

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Attrition and Retention Strategies of IT and Service Industry

1.3 Objectives of the study The purpose of the study is to examine the factors that influence turnover intentions among I.T and Service sector professionals. Following are the objectives of the study: a. Explain the factors that affect attrition and the various studies done in and around the subject by conducting literature review and questionnaires of respondents. b. Discover the factors that affect Attrition in IT and ITes sectors in Indian market through survey c. Gain an understanding factors that affect Attrition and Retention strategies through literature review d. Develop a framework to explain the factors of attrition and Retention Strategies

1.4 Motivation behind the study

Understanding the factors that contribute to attrition is of pivotal importance to IT and ITes enterprises in India. There has been great study on the alarming attrition in these industries. Following are some citations in relation to the motivation of the study

M1: According to Bhatnagar (2007) India with its low cost, language skills, technical education and a supportive government has seen a staggering growth of 60 per cent per year in its offshore market and the major contributor to it is the BPO/ITES, This growth has also created an attrition rate of 30 to 35 percent and in the next five years companies will be facing a major financial loss if these key issues are not dealt with.

M2: According to the article in the business-standard (2005) reported other destinations like Philippines and China becoming attractive destinations. The article also highlighted views of Malcolm Waggets( chief operating officer for HSBC Global Resourcing in

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Attrition and Retention Strategies of IT and Service Industry South Asia) on how attrition in ITes had reached the 50 per cent mark and how consultants needed to partner with companies in formulating long term retention strategies to maintain India as a favourable destination for offshore market for Global organizations.

M3:

(bpoindia, 2008) reported an attrition rate of 30 per cent and the site also

highlighted a report by Nasscom on how the outsourcing industry was expected to face a shortage of 262,000 professionals by 2012. M4: (bpoindia, 2008) highlighted some of the reasons for the high rate of attrition was due to various factors like salary, work timings, other career options. M5: (siliconindia, 2006)

highlighted the growth predicted he Indian information

technology enabled services (ITeS) industry to touch $10 billion by 2006-07 and $26 billion by 2009-10, according to credit rating agency ICR said that the ITeS sector in the country was facing the threat of rising labor costs, high attrition rates and security concerns. M6: (hindu, 2007) echoed the voice of a key IT industry leader recognising the problem of attrition and how it plagued the growing IT and ITES industry in India.

M7: The very factors that makes India an attractive destination can be overridden due to the costs associated with attrition. (bpo.india, 2008) reported Hewlett-Packard(Business Standard) having found the cost per ticket increasing due to inefficiency and language barriers and the the cost of moving from Ireland to India can never be recovered. It is further reported that GE Capital (Business Standard) has moved a call centre back to Australia “after staff attrition rates of 70% wiped away any potential cost savings.”

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Attrition and Retention Strategies of IT and Service Industry M8: Bhatnagar, (2007) study took the answers to 272 sets of questionnaires completed between 2005 and 2006 in the four BPO/ITES organizations falling in the National Capital Region of India. Their profile was an average age of 24, the average education was an undergraduate degree and the gender split among respondents was 42 percent female and 58 percent male. The results of the survey showed that the highest attrition happened just after training and that it was a challenge to keep an employee for six months was the biggest challenge the study indentified the requirement for retention of the employee from day one. It recognized culture having a major influence in employees leaving companies. The policies that govern Career planning coupled with performance appraisals, adequate training, infrastructure support and vision. The study identified the requirement for employees to have interesting work, career growth, working with great people, fair play and a supportive management for retaining them. Summary of key factors identified by Bhatnagar (2007)

M9: Mckeown( 2002) established the link between employee orientation programme and how crucial it was to achieve the retention strategy and he looked at the whole retention strategy as something that has to be achieved from day one and focussed on the lack of interest shown by companies in investing in orientation programme and how its viewed as a waste of time. He further argued that people in a social situation make their minds in 30 seconds and this should not be different for an employee who joins the company. The culture needs to be such that he is made to feel at home and sets the direction in which the employee must travel.

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Attrition and Retention Strategies of IT and Service Industry M10: Employee Turnover in IT industry I.T. managers today say 15 to 20 percent annual turnover is considered average in I.T shops (Alexander, 1998). According to Nasscom (1999), the attrition rate among Indian software firms has fallen from 25% in 1992 to 17% in 1998.As per a study conducted by the Indian Institute of Technology, Bombay (IIT – B), the attrition rates in IT organizations is average 22 percent. The study was conducted with a sample of 1,208 IT companies in the country. Another survey done by People – a Gartner, Group Company, specializing in the management of human capital in IT organizations - has observed that the average tenure of an IT professional is less than three years.

M11: Employee Turnover in Service Sector An attrition rate in call centres has become legendary. Indeed, the attrition rates in some Indian call centres now reach 80%. This is an extreme figure but the average attrition rates in Indian call centres are up around 30-40%. Sharma( 2008) noted the average attrition rate in the Indian BPO sector is approximately 30-35 percent which is comparatively much lesser than the prevalent a attrition rate in the US market (around 70 percent), but the challenge continues to be greater considering the recent growth of the industry in the country. Sharma( 2008) further pointed out the comparitive problem faced by BPO in Us is three decades to just one decade in India He further pointed out the requirement to Keep low attrition levels because of the inability to recruit effective agents who can deliver excellent customer service. The article also laid down the importance for a salary growth plan for each employee which is well defined in order to discourage employees from leaving a company on the basis of pay The average training costs associated with an employee is relatively high coupled with cost in hiring and other support cost multiplied by attrition can lead exorbitant losses

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Attrition and Retention Strategies of IT and Service Industry For example, if a person leaves after the training it costs the company about INR. 60,000. (Figures are approximated based on salary of trainer and input cost) For a 300 - seater call centre facing the normal 30 percent attrition, this translates into INR six hundred thousand per annum.

1.5 Summary of the motivational aspects:

Table 1 summary of the motivational aspects

Motivational Aspect M1: Growth in IT/ITES sector of 60% M2: China and Philippines becoming choice destination M3: BPO industry at 30 percent attrition

M4: Factors that affect current attrition

M5: Growth in ITEs sector to touch $26 billion by 2009-10

Focus of discussion Growth also leading to high attrition 3035% High attrition in South Asia and requirement for retention strategies Discussion on shortage of staff the industry would face (262,000 professionals by 2012) salary, work timings, other career options were discussed as the major contributors of attrition Rising labour costs, high attrition rates

Evaluation Importance of curbing attrition which is alarmingly increasing Requirement of retention strategies if India is going to maintain the advantage Highlighting the importance for industry wide change to influence attrition and develop retention strategies

Identification of major factors that cause attrition

Requirement to maintain the very reason that sustains growth which is mainly man power

and security concerns. M6: Key in...