Attrition-the second biggest concern for IT solutions providers last year (as per DQC HR Survey 2005) has now become the top HR concern, according to DQC HR Survey 2006.

Every organization, be it from the information technology sector or any other, knows one thing that HR concerns are here to stay. And of all the HR concerns, when 'attrition' takes the top slot, it is not a good sign.

DQ Channels asked the top 50 solution providers to rank the biggest HR concern in their organization. We received varied answers. However, 'attrition' figured as the top HR concern with an average attrition rate of 14 percent in most SP organizations. This was followed by 'recruitment' as the next biggest concern for the HR department. 'Training' and 'poaching' formed the next few concerns for solution providers in India.

Attrition on the rise
Attrition is inevitable, but if the average rate of attrition takes an upward trend, then there is something seriously wrong. Last year, the average rate of attrition among solutions providers was around 12 percent. This year, at 14 percent, the survey shows that it is a marginal increase of just two percent. However, since 'attrition' takes precedence over 'recruitment' as an HR concern, it is reason enough to worry.

The need of the hour is to understand why attrition has become a top concern for IT solutions providers across the country. Organizations need to evaluate why employees 'jump ship'. Is it money, job satisfaction, work pressure or inter-personal relations? Whatever be the reason, if an organization is unable to handle them effectively, consider it the beginning of the end of the organization.

Attrition is not just about losing people. What could be even worse are the consequences of losing good people by way of losing money, productivity and knowledge transfer. If an employee is jumping the ship, it is the right time to evaluate and find that 'something' which is making the person leave. That something would be either the ship or the captain or the weather. While some hire external consultants, some even resort to analyzing exit interviews. Whichever be the method, the important thing to find is to find out the reason and work on it immediately.

In a nut shell

Attrition is the top HR concern for most IT solution providers. Last year, attrition was the second most bothering HR concern with recruitment at the top. Solution providers have begun to depend more on job sites and print advertisements for sourcing people. Last year most solutions providers depended on referrals as the best source of getting people. 'Better opportunities' remained the top reason for employees leaving the company. The average attrition rate in typical solution provider organizations has increased from 12 to 14 percent. The average attrition rate of technical staff in a SP outfit has come down from 16 to 13 percent. The average revenue per employee has reduced to Rs 17 lakh from Rs 20 lakh in the previous year. Around 70 percent of the SPs surveyed still have a separate salary structure for technical staff. The average salary hike in the SP community has remained more or less steady at 19 percent. This was 18 percent as per last year's survey. For technical staff the salary hike percentage remains same at 21 percent per annum. On an average about 38 percent of the total staff in any SP outfit are graduates. It was 40 percent last year. The ratio for staff with BE/BTech qualification also remained same at 24 percent (26 percent in the previous year). The age group break-up of employees remains the same for this year, with 57 percent staff in the age group of 25-35 years, and 24 percent below 25 years of age. There are more number of solutions providers spending on certifications, which on an average totals Rs 12 lakh. Only 20 percent of the tech staff employed in a typical SP firm has some technical certification. This used to be 30 percent last year. The number of solutions providers having its employees sign bonds have increased from 15 percent last year to 20 percent now. Methodology This year again DQ Channels took responses from top 50 solutions providers across the country. We asked the HR managers of these companies to provide us with exhaustive information. Based on the information collected, the data was analyzed using weighted averages.

Many of the HR issues of solutions providers are more or less the same. But as they grow, they also adopt processes and best practices, thereby resolving and tackling HR issues on the way. However, there are many solutions providers who are still grappling with the usual HR issues, and seeking help. DQ Channels HR Survey 2006 came up with many more findings. Read on and find out what other HR issues haunt top solutions providers in their HR processes.

Organization structure
The business model that solutions providers follow is mainly technical in nature. So to have a large number of technical staff is critical for the survival of the company. DQC HR Survey 2006 found that 55 percent of the employees in a typical solutions provider setup are technical staff. This is a big improvement over the previous year's 30 percent. Of this, two-thirds are devoted to technical support and customer care, which by and large is a very good ratio for any solution provider outfit. About 18 percent of the average staff relates to sales and marketing. According to industry analysts this is a good mix of employees break-up and the industry should try and keep up this ratio.

Getting the right people for the right job is the most common challenge HR managers face in every industry. According to the results of the DQC HR Survey, the same HR concern figured on the top for most solutions providers.

When DQ Channels asked SPs to rank the second biggest HR concern in their organization, we received varied answers. However, on taking a weighted average the results showed 'recruitment issue' as the second biggest HR concern. This was followed by 'training' and 'poaching' as the next biggest concerns for HR departments. Relatively, 'motivation' as a HR concern remained an issue with lesser significance for the HR department.

Coming back to 'recruitment issues' as one of the top concerns, HR managers feel, people are in abundance. But getting the right people with the right set of qualification and expertise is a problem. The result of the survey also revealed that, unlike last year, companies were depending more on print advertisement and job websites for hiring people. Last year, most SP outfits depended more on 'referrals' as the prime source of getting people.

When organizations fail to get the right people, it signifies extra work on the part of the HR department and colleagues to train the new appointees. Many companies do take the pain to train new recruits by conducting regular workshops. However, analysts feel that the best training one can get is on the job experience. Feedback on the training part showed that some com-panies have given a lot of importance to the 'training'. But new comers use the company as a learning ground and then leave after learning the trick of the trade.

Why do people jump ships?
The results of the DQC HR Survey 2006 showed that the reason people leave are not very different from what it used to be in the last few years. The main reason for employees leaving is the same as in any other industry-for 'better opportunities'. Respondents felt employees change jobs looking for greener pastures. At the same time, the respondents ranked 'salary issues' very close to the above parameter, as a reason for leaving the company. For a majority of the respondents 'job satisfaction' ranked third as a reason for leaving the job. The fourth-most serious HR concern for any HR manager in a solution provider outfit is 'performance of the employee'.

'Working abroad' as a reason for leaving an organization got the lowest ranking. Generally, people tend to believe that people working in the field of information technology always target the US as dream destinations for work. However, in the solutions provider community not many have looked at the option of opportunities abroad. It is probably because of the predominance of hardware engineers in the field. Indian hardware engineers are not as popular as software professionals in foreign markets.

Give opportunities within
The grass is always green on the other side. “If employees leave for better opportunities, why can't organization create that 'better opportunity' within?” asked an HR consultant. The general feeling is that employees leave for better salary. But the survey results show that there are many other issues apart from salary.

According to the survey, the average attrition rate of solution providers surveyed stood at 14 percent, but there were companies with attrition rates as high as 22 percent. The lowest was at three percent.

In a solution providing company, technical staff play a key role. If this set of people are not handled smartly, losing them could be a big loss to the company. The survey found that on an average 13 percent of the technical staff leave every year. This is an improvement of over last year, which stood at 16 percent. As a means to tackle attrition, some companies have tried getting the employees to sign a bond at the time of recruitment. This practice of getting employees to sign bonds is very old. While this might have worked very well for some, 80 percent companies surveyed said a big 'No' to bonds. Only 20 percent said 'Yes' to following such practices.

Salary structure
The results of the survey show salary as the second most important criteria for an employee to be happy. It does influence a lot in employee retention. According to the survey 70 percent of the SPs surveyed had a different salary structure for technical staff. The rest did not differentiate between the two. The survey also found that the average salary hike SPs give to its employees is around 19 percent per annum. For the technical staff it is around 21 percent.

Just paying a good and hefty salary may not work all the time. What is more important is to have a good appraisal process where performing employees are rewarded. Salary hikes after measuring performance justifies employee satisfaction. Defining the measurable is equally important. Policy makers within the company should also remember that a flawed appraisal process could also make things worse.

Young workforce
57 percent of employees in the companies surveyed were in the age group of 25-35 years, and 24 percent were below 25 years of age. Besides, a large chunk of the employees working had decent qualifications to justify their job roles. Around 38 percent were graduates followed by 24 percent of the staff having a BE or BTech qualification. That makes this community manned by a strong set of qualified and young people.

Certified for the job
A company that spends more time and money in certification can expect to do well in the market. DQ Channels through this survey tried to find out how many solutions providers take serious interest in getting their employees certified. The results were interesting: About 30 percent of the tech staff employed in a typical SP firm had some certification. Of the 80 percent who actually spend on certification, the average was Rs 12 lakh per annum.

NELSON JOHNY
With inputs from DQC team

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