Managing Attrition in the Indian Information Technology Industry

The year 2004-2005 was another successful year for the Information Technology (IT) industry in India with total software and services revenues recording a high of $22 billion for the year 2004-2005 (Refer Exhibit I). The employee base also showed a whopping increase to cross the one million mark in the year 2005. However, despite the growth in the overall employee base, companies were struggling to retain their existing employees. Analysts observed that managing attrition in the industry was important because skilled professionals formed the crux of this knowledge-intensive industry. What's more, the cost of recruitment and training was a huge expense for most IT firms.

Companies were beginning to realize the importance of factors other than salary with which to motivate their employees to stay. A healthy work environment, continuous employee learning, work-life balance, recognition and corporate brand building were some of the key initiatives taken up by IT companies in recent years to manage attrition. In 2004, Infosys Technologies Limited (Infosys)² devised a policy of taking security deposits from fresh graduates who joined the company at the entry level to discourage them from leaving the company during the training period whereas Wipro Technologies Ltd³ (Wipro) started a matchmaking service for its employees.