Small pay jumps, reduced hiring cut attrition rates

Economic slowdown has led to 3-5% fall in attrition across sectors

MUMBAI: Manish Sharma, an employee in a Malad-based call centre, is bored of his job. He is looking for a change and applied to three firms for a new job. All the firms could offer him was a 9% pay hike on his current salary of Rs 23,500 per month.

Sharma, who has been with his present employer for two years, is seeking a 25% jump in salary. “But I don’t think it is likely at this time due to the economic conditions. I guess it’s best I continue with this company for now and move only when the situation improves,” he says.

The dark clouds of inflation, rising crude oil prices and an economic slowdown have a silver lining for the human resources (HR) department of companies. ‘Voluntary attrition’, where employees quit for greener pastures, has fallen considerably in the last few months, say HR experts.

Sandeep Chaudhary, a business consulting leader at Hewitt India, a leading HR outsourcing and consulting service provider, said that in the last few months, attrition rates in sectors such as banking, financial services, retail, IT and others have dropped by 3-5%.

Boom in the job market and shortage of talent have made attrition a headache for the
HR departments of most companies. Economic slowdown has been a blessing in disguise, as low margins and growth rates have led to companies reducing hiring and correcting pay jumps. The question of job security is also looming large on the employee’s mind and most don’t want to take that jump if the salary hike isn’t worth the trouble.

T Muralidharan, chairman and managing director of TMI, a talent management and talent acquisition company, said that the economic slowdown is acting as a natural barrier to attrition. He said that earlier, candidates could demand 35-50% hikes but now companies don’t give anything more than 10%.

“So employees are playing safe by being where they are and waiting for the situation to improve,” said Hewitt India’s Chaudhary.

According to Subhro Bhaduri, executive vice president of Kotak Mahindra Bank, reduction in options is making employees stick to their jobs. “As multiple job opportunities are witnessing a reduction, we are seeing a decline in attrition in the banking sector,” he said.

Hyderabad-based software major Satyam Computer Service too has seen a ‘remarkable’ decline in attrition, said Sucharita Palepu, its talent management group head.

Kishore Poduri, the HR head at eClerx Services, a knowledge process outsourcing (KPO) company, said attrition rate has dropped from 35% to 22% in the last 3-4 months. “In a normal situation, the fall in attrition rate would have been 2-3%, not the huge 13%,” he said.

In the June quarter, attrition dropped to 16.6% from 18.3% in the March quarter, said Pratik Kumar, executive vice president (HR), Wipro. At IT services and solutions company Datacraft India, the attrition rate has fallen by 5% in the last few months from the usual 2%, said Ulhas Aher, its HR head.

Some companies, however, haven’t noticed any significant fall in attrition. B Anant, the HR head at ICICI Lombard General Insurance, said the company hasn’t noticed any change over the past six months. “The company’s attrition rate remains stable, in line with industry averages, which is at about 25%,” he said.

g_priyanka@dnaindia.net