No Threats of Resignation

The HR departments of IT companies have finally stopped complaining. Their
biggest grouse against the brood of whizkids simply does not exist any more.
Frantic recruitment, preparing sumptuous compensation packages and then losing
the same ‘talent’, goodies et al, to someone else who offered more and back
to searching resumes all over again…that was what life was like during the IT
boom. Yes, the slowdown was painful, especially as in several cases, ‘letting
go’ talent was suddenly replaced by ‘easing out’ people you had actually

the deed is done and the dust has settled on the exits. Companies have settled
down to make the most of what is left. Though considerably watered down by the
omnipresence of ‘cost cutting’, companies are abuzz with terms like
re-training, skill development and team building. The HR people back there have
finally stopped chasing impossible recruitment deadlines and have found the time
to practice what they wanted to–building human resources.

A Nasscom study has found that the attrition rate in the IT industry has been
slipping from 22% in 1995 to 4% in 2001. Delving into the reasons for the dip in
attrition, HCL Perot Systems (HPS) HR head Rajat Ganguly says, "The year
2001 has been tough for most IT companies and as a result, recruitment was
frozen. People found it risky to venture out during the economic downturn and
decided to remain with the company or bide their time."

The silver lining
The slowdown might have cut short the software professionals’ dream run
and brought a host of IT companies to their knees. But it also helped companies
to focus more on employee productivity, invest in better training of employees
and also meant stability for employees and employers.

“With higher levels of commitment from the employees, most companies that invested in people during the boom period will emerge stronger after this slowdown experience”

Anil Noronha 
head (HR), Onward Novell Software (I)

Points out Oracle HR director S M Udupa, "Lowering of the attrition rate
is good for the company as well as its employees. After the overheated growth,
all industry related metrics including attrition, are bound to stabilize at
realistic levels. For the company, greater stability is always welcome."
For once the anxiety about people leaving is lessened, companies can concentrate
more on their business, provide the right strategic focus and ensure better
planning, execution and delivery of products and services.

And the greatest beneficiary of this situation has been none other than the
customer. "The customer today is confident than ever before, as he is now
witnessing clear continuity in the project team. The fear of talking to a new
engineer all over is frustrating for him too!" quips Phillips Software HR
director SV Nathan.

Apart from the obvious business benefits, the confidence that the entire team
will hold together till the end of a project does wonders for the morale of
employees. Team leaders today are charged with a new degree of confidence
because there is a clear enhancement in employee productivity. The power balance
has now been corrected as not every software engineer fresh out of college can
tilt the balance unduly in his or her favor. "The manager does not have to
counter resignation threats and now has the chance to improve his managerial
skills as well because a stable team offers a higher scope for the–Plan, Do,
Check, Act cycle," explains Nathan.

But Onward Novell Software (I) HR head Anil Noronha warns that the drop in
attrition rate might just be temporary and that companies need to prepare for
the future. "Companies need to leverage this opportunity to further
strengthen their employee relationships and engage them more actively to
safeguard against the anticipated increase in attrition rate once the economy is
on growth path", says Noronha. For, as Ganguly points out, real
productivity improvements can only be felt if attrition rates can be controlled
when the business climate is good.

Nevertheless, greener pastures do beckon
And the gloom has begun to lift. Those who stuck around primarily because of
the lack of options are bound to be restless and be on the lookout for better
assignments. According to Nasscom, the attrition rate in the future is expected
to rise between 8-10%.

Besides, most organizations are in the process of consolidation and are at
the same time focusing on exploring new areas. For example, the travel, health
and telecom verticals are likely to see growth. Demand for people with
competencies in these areas is bound to go up. It is the same with insurance.
With the increased focus on Europe, Japan and China, newer, untapped markets are
likely to open up and therefore the demand will also slowly pick up.

Quality counts
There certainly is hope on the horizon, but somehow, things will never be
the same. There will be nothing to match the mad scramble of the IT boom. For
once, it will only be the quality professionals who will be up for grabs.
Companies who were cautious and had shed employees would have to recruit
employees to deliver the new opportunities that would arise. The employers would
be choosy to ensure that the right people are recruited.

"The attrition rates would stabilize around 8-10%. It might actually
rise a little steeper and then plateau. However, we believe that the demand for
good people would always exist. It is therefore imperative that the company pays
personal attention to the high potential and high performers in the company. Get
them involved in the management processes, appreciate their aspirations,
continue to provide them the encouragement to grow professionally and add value
to them while they contribute," says Udupa. Similarly, the drop in
opportunity has taught employees to value what they have and actually make long
term career decisions.

It’s a mindset issue
While opportunities are opening up, there is a level of caution being
exercised. The industry has seen many examples of disappointments, especially
after established people jumped ships when the dotcom fever caught up.
Subsequently, in tougher times, people have seen loyalty and consistent
performance during good and bad times being recognized and rewarded. These
experiences have certainly changed the mind-set of employees, who were jumping
at the first opportunity that came their way, for any increase in emoluments.
And this change in mindset is likely to outlive the bad times.

“Year 2001 has been tough for most IT companies. As a result, recruitments were frozen. This obviously resulted in much lower attrition rates. End of the day, that’s helped”

Rajat Ganguly
head (HR), HCL Perot Systems

"Employers at one point in time were increasing salaries twice a year to
retain employees. There were always options, so the slightest discomfiture would
mean the employee walks away to what would seem a better proposition. Today
almost all companies have either cut or frozen salaries. This is all being taken
by the employees in their stride. They realize the need for the company to stay
afloat. They enjoyed the good days and now if they have to tighten their belts
so be it. The down turn has brought in greater maturity," points out Udupa.

Noronha agrees that organizations that invested in best practices during the
boom period (rather than just make a killing) are clearly the winners in the
current business environment. Employees are suddenly realizing the depth of
these company initiatives and are more appreciative now than being cynical.
"The best example would be in the area of change management. Earlier,
employees would go through the motions whereas now they are more involved
whenever an organization tries any new initiatives. With higher levels of
commitment from employees, companies that invested in people during the boom
will emerge even stronger," says Noronha.

The renewed focus on defining long term career path has also resulted in
employees prioritizing their reasons for joining a new company, albeit
differently. Given that a major chunk of the demand will now be from industry
verticals, employees are actually looking at building domain knowledge rather
than moving from one project to another.

Companies too have started looking at people philosophies from the long-term
perspective. Ganguly suggests that we need to establish standard norms for
measuring and quantifying the intellectual capital of a company and start using
that as a measure of performance, along with the business numbers. "Today,
there are very few quantifiable metrics for HR related performance measures,
other than attrition rates," he points out.

In the light of this, Nasscom has implemented a Code of Ethics on recruitment
procedures for its member companies. This is basically to inculcate and
encourage fair and best practices for both the employers and the employees. A
Nasscom spokesperson explains that the issues in implementing such a code of
conduct are varied and different for companies. For example it would be
different for a SME as compared to that for an MNC.

Also in the pipeline is a Nasscom study in collaboration with Hewitt
Associates in which one of the subjects covered is based on the best practices
prevalent in the software and services sector. "This is the first ever
initiative to provide Nasscom member companies to share and participate in the
most critical resource in their armory–its people. The issues involved with
respect to the code of ethics would be outlined, once the study is
completed," informs a Nasscom spokesperson. "However, unless all the
companies practice the same uniformly, the effects would not be felt," he
says. And can Nasscom really ensure that companies abide by the code of ethics?
"Members of Nasscom sign a code of conduct, which needs to be strictly
adhered to. Nasscom can take action if the need be," points out a

After all, competitive salaries and attractive perks do matter, probably a
great deal at the time when professionals switch jobs. But as Udupa says,
"It is more the other strategies of engagement such as job content,
challenging assignments, a learning environment and involvement in
organizational processes which help an individual to contribute and make a
difference, that keep employees in top gear. There is no short cut to making
this happen. Only companies with such a focus would be able to retain their
employees and be successful in the long term."

Manjiri Kalghatgi in New Delhi

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