A DQ-IDC INDIA SURVEY: Indian IT's Best Employers

In the face of falling employee satisfaction, Infy drops in the rankings for
the first time to #4, even as HP smoothly carries out post-merger cultural
integration to climb back to the top 3. MNCs walk away with half the listing.
Gains: TCS, HP and Rolta. Losses: Infy, Wipro and Sun

Final Rankings: The EMPEX 20 HR Rank Employee Survey Rank Top 5 Large Companies Top 5 Small Companies Preferred Employer Retention Rate Attrition Rate Dream Company Reasons for Joining a Company
	Effects of recession subside, but job security and morale remain key issues
	Attrition falls to an all-time low in fiscal 2002-03, though dissatisfaction on salaries and appraisals remains high-and a cause for concern
	Nine companies from last year slip in the rankings; four move up
	Surprises of the survey-the rise of TCS, the fall of Sun Microsystems and the entry of two unexpected companies into the Top 20-WeP and Accel ICIM
	A clear trend this year-lower overall satisfaction, despite the signs of revival
	Salary-as the key motive for joining any company-finally dropped to #4 this year. Only 10% of the 1,000 respondents called it their “main driving force”

If the most exciting things about surveys of this nature are the surprises,
the unusual upsets and the dark horses it throws up, then this was as exciting
as it could get. Right up front was the first big upset-after three years at
the top, Infosys finally slipped to number 4. It wasn't an unexpected upset
though-over the last three years, employee satisfaction levels had been
falling and events in the last year were expected to exacerbate that. The
surprises, though, were the rise of TCS, the fall of Sun and the entry of two
unexpected companies into the Top 20-WeP and Accel ICIM. And finally, IBM's
re-entry into the DQ survey and its #5 ranking.

As the chips fell in the end, nine companies from last year had slipped, four
moved up and there were seven new entries. Another seven from last year's
survey slipped out of the ranking altogether for one reason or another. These
were-SAP Labs, Cognizant Technology Solutions, Hughes Software Systems, NIIT,
Mascon Global and Kshema Technologies.

In more ways than one, this was a year of churn in the industry's HR
environment. Largely, this was driven by a growing maturity in the industry, the
increasing trend of MNCs setting up offshore centers in the country, the intense
recruiting season last year, the recession that has taken its toll, and even the
signs of revival.

One of the first clear trends that emerged was lower overall satisfaction,
despite the signs of revival. This showed up in a couple of things. One,
irrespective of how the 'Preferred Employer' rankings went, in almost every
company, fewer people named their own company as their 'Dream Company'. To
illustrate, at Infosys, the number of its own employees calling it their dream
company fell from 96.7% to 44.8%; at HP, that fell from 94.4% to 54.3%, even
though the ranking didn't change much; and at Sun, that fell from 96.7% to
44.8%.

Two, relatively lower employee satisfaction also showed up in the fact that
eight of the 13 companies common to both last year and this, fell in the
employee parameter rankings. This included IBM, which, for the last two years,
had topped all employee scores, but fell this year to #3.

Some of this, of course, could be accounted for by the new entries this year,
nudging old ones down. But more than a little of it was driven by another change-where
salaries, perks and appraisals had once been the key USP of the industry, they
had now become the key pain points. Of all the employee satisfaction parameters
the survey measured, salaries and appraisals were at the bottom of the charts.

That, incidentally, has coincided with salaries and perks becoming less
important reasons for joining a company. Given the times we are living in,
employees not surprisingly seemed more focussed on growth opportunities and job
security as reasons for joining a company, instead of salary and company image.
Salary finally dropped to #4 this year, with only 10% of employees calling it
their "main driving force". Company image lost sheen too, with only
14% calling it their "most important reason", compared to 23% the year
before.

Put together, what it meant was that while salary may not be the one big lure
for attracting talent, it could be a big one for retaining it.

The other clear trend-the growing impact of multinational corporations or
MNC development centers in India on the HR environment.

The MNC effect

Compared to just eight last year, 10 of the top 20 employers this year were
MNCs (six of them were among the top 10 alone). That might not look like much of
a change, but MNC companies have also dominated employee responses across almost
all parameters. For instance, eight of the 10 employee satisfaction parameters
were topped by an MNC. They also took 7 of the Top 10 employee rankings on
overall satisfaction, company culture, job content, salary, dream company and
preferred employers, and 6 of the top 10 rankings on appraisal systems and
people. In fact, all top five companies with greatest satisfaction on training
were MNCs, as were 4 of the top 5 on satisfaction with company culture.

Some of this has, of course, happened because of specifically different ways
in which MNCs function. But some of it has also happened because of things that
went weird at Indian IT services companies last year. For instance, employees at
MNC companies seemed to give their employers higher scores on these statements-"my
opinion matters in the company" and "the company is open to ideas and
suggestions from its employees". On both statements, the companies that
came in last were large ITS majors. The reason-as companies hired heavily,
employees felt a little lost in the crowd.

The hiring fallout

On the whole, a lot of this year's trends seemed to be driven by an
extraordinary amount of headcount addition during the year. Among the Top 20
Best Employers alone, HR strength grew by a good 28% this year, compared to just
10% the year before. This masks some skews-companies like Infosys and HCL
Technologies added around 33% more employees during the year (compared to just
around 7-8% the year before), Wipro Technologies added 42% more, compared to a
7% fall in employee strength last year, while Digital GlobalSoft actually
doubled its employee strength.

This has had some inevitable repercussions. High periods of hiring often also
mean comparative loss of focus on non-recruitment related employee issues and
inevitably, most of the big recruiters fell steeply in the employee parameter
rankings. In fact, Tata Consultancy Services seemed to have had a significantly
better year, partly because it was among the few that maintained conservative
recruitment levels of about 16% new additions. The only exception was HP, which
moved up on most parameters, despite adding 40% to its workforce.

High recruitment levels also showed up in a sense of employee disconnect and
alienation with the companies-specifically on issues relating to whether they
thought their opinion mattered in the company; whether they had the freedom to
take risks or whether they thought the company was open to ideas and suggestions
from employees. Not surprisingly, Wipro, HCL Tech and Infosys came in at, or
very close to, the bottom on all such empowerment questions.

That said, however, employees also indicated that they believed the industry
had some interesting strengths. Key among them...

• A fair and ethical manner of conducting business-both internally and
  externally;

• A high value on honesty and integrity;

• A fruitful relationship with peers;

• The ability to inspire pride in the employees who work
  for them; and

• Good infrastructure.

These, of course, are relative strengths within the IT
industry and not a comparison against other industry segments in general.

Another key thing to remember as one looks at the company
profiles and individual strengths and weaknesses in the following pages is that
these are relative strengths and weaknesses of companies that have already made
it to the Top 20 of this year's survey.

At the end of the day, though, there were some key learnings
during the year. First, that salaries and appraisals may not be enough to
attract good talent, but they are significant pain points with employees and may
be key to retaining them. Two, that there's a whole new paradigm coming into
play with the coming of age of MNC development centers in India. As offshoring
becomes more and more mainstream and these centers grow, Indian companies will
feel supply-side pressure on talent. And they will have to compete on HR
processes, environment and employee satisfaction levels with some of the best
companies in the world.

Sarita Rani & TV
Mahalingam in Bangalore

Analysis by Tirthankar Sen, IDC India

METHODOLOGY: DQ-IDC Best Employers' Survey 2003>>>>>

Research Design

The survey was designed and carried out in three phases. In the first phase,
a series of in-depth interviews were conducted with a panel of HR experts in
India in order to understand the changing HR scenario and the parameters most
relevant to gauging what makes a company a "Best Employer". The
interviews were conducted in Delhi and Bangalore.

In the second phase, HR questionnaires were sent to 200 IT companies. This
was a mix of hardware and software companies in the country and included both
Indian companies and MNCs. The questionnaire sought information on areas such as
employee strength, salary structure, training days, tenure of top management,
etc. Of the 200 companies, 44 companies participated in the second phase. A
total of 26 companies were then shortlisted, based on the following parameters:

• Total employee size:
  Technical and marketing IT professionals in India only, as on 1 April 2003.
  This did not include either back-end employees or employees posted outside
  India;

• Revenue compound aggregate growth
  ratio (Fiscal 2001 to Fiscal 2003);

• Average tenure of senior
  management (GM level and above): The tenure figure was factored by the
  age of the company to remove any discrepancies that may have arisen between
  old and relatively-new companies;

• Total average training:
  Included the entire gamut from induction and technical to soft skills and
  others. The data was weighted on the total marketing and technical IT
  professionals in the company;

• Retention rate: Share of
  employees (at least one-year-old in the company) who were still with the
  company on March 31, 2003;

• Average salary hike (in
  percentage); and

• Cost to company: The
  figures were weighted based on the average salary at different experience
  levels.

The first shortlist of companies was based on these seven parameters, which
were given different weights based on their relative importance.

In the third phase, a largescale survey was conducted among 1,000 employees
of the 26 shortlisted companies, across the country. The sampling was done on
the basis of the distribution of employees in different cities. The employee
survey comprised of face-to-face interviews with employees at different levels,
based on a structured questionnaire. This questionnaire was redesigned this year
and comprised of a number of statements under different broad parameters-Composite
Satisfaction, Company Culture, Job Content/Growth, Training, Salary &
Compensation, Appraisal Systems and People. Employees were asked to rate each of
the statements on a 10-point agreement scale-which was then regrouped into 'Strongly
Agree', 'Somewhat Agree' and 'Strongly Disagree' responses. Other than
the above parameters, employees were also asked about their salary structure,
preferred company in the industry, etc.

The employee survey covered six major cities-Mumbai, Delhi, Chennai,
Kolkata, Hyderabad and Bangalore. In each city, the sample quota was assigned
based on the company's employee strength in that city. A further
classification of target respondents was done on the basis of job profile
(marketing, technical and senior management) and years of IT experience (less
than 2 years, 2-5 years, 5-10 years and more than 10 years). This quota system
was followed strictly to get a proper representation of different types of
employees in the sample. A process of cross-checking was established to ensure
the authenticity of the data and veracity of the interviews. In order to retain
objectivity, every attempt was made to take on an unbiased sample and to ensure
that the management of the company did not influence the employee responses.

While earlier companies that did not participate in the first phase of the
survey were left out altogether, a decision was taken this year to include
companies like Infosys and Oracle despite non-participation because (a) Leaving
out key companies would give an incomplete picture of Indian IT's best
employers; and (b) Feedback from previous surveys indicated that if we had
enough HR data otherwise available, an accurate picture of the company's HR
environment was possible.

The Empex Score

In the employee survey stage, for sampling the number of IT professionals in
different cities, their job profile and years of experience were taken into
account as independent variables.

The final ranking to arrive at the best employer (DQ-IDC empex Score) was
based on combining scores from the HR Survey and the Employee Survey, calculated
separately.

The HR Score of the selected 26 companies was calculated based on the seven
parameters, indexed and weighted on a total score of 100. The seven parameters
used were-Total Employee Size; Revenue CAGR (2000-01 to 2002-03); Average
Tenure (years); Total Average Training; Retention Rate; Average Salary Hike (%);
& Cost to Company.

The Employee Score was calculated based on 10 parameters, also was weighted
and indexed on a total score of 100. The ten parameters used in this case-Overall
Satisfaction Score; Company Image; Company Culture; Job Content/Growth;
Training; Salary and Compensation; Appraisal System; People; Preferred Company
(Internal: Percentage of respondents of a company who said their own company was
the preferred one); & Dream Company (Industry: Percentage of respondents in
the total sample who preferred a particular company).

The score on the above parameters like Company Image, Company Culture, Job
Content/Growth, Training, Salary & Compensation, Appraisal System and People
were calculated on the basis of the number of statements under each of these
parameters. A correlation analysis was run between overall satisfaction and
statements across all these broad parameters. It gave us the dependency of the
dependent variable (Overall Satisfaction) on each of these statements, which, in
turn, provided the weights of each of the statements. The weighted average of
the individual scores of statements gave us the scores at each of these broad
parameters level, and these were used for the final ranking.

The HR and Employee score was weighted and indexed on a 100-point score to
arrive at DQ-IDC Empex Score, 2003.

Dataquest decided the weights for all parameters in consultation with other
HR personalities, and these were used by IDC  India in the analysis.