BANGALORE: Rising attrition among project managers with experience of between three and eight years, who handle critical delivery teams for top customers, is proving to be a big worry for major IT firms like Tata Consultancy Services (TCS), Infosys and Wipro that are scrambling to cope with renewed demand for offshore outsourcing.
Until a few months ago, technology firms were busy offering salary hikes and other incentives to software engineers to retain them as demand picked up.
However, some companies are now battling attrition as high as 40% among their project managers, threatening to disrupt ongoing engagements.
“Customers want commitment about retention of these project managers. At best, we can offer them 15-20% retention hikes, but what can you do when multinationals like Accenture and Cognizant are wooing them with around 40% salary hikes?” said a senior executive of a mid-tier Indian outsourcing firm, which competes with larger rivals for more business from customers such as GE.
For India’s $60-billion IT industry which is set to regain double digit growth rate this year, rising attrition among key staff is a bigger worry than business challenges of currency risks and billing rates.
According to Nasscom, the Indian IT industry will hire around 90,000 this year, taking the total IT workforce to around 2.3 million. Last year, the industry added only around 20,000 professionals as companies stalled hiring plans.
In some instances, these project managers also try and poach engineering staff from their former employers. Recruitment professionals such as Kunal Banerji, chief executive of Absolute HR International, India, say that project managers attract junior members of their teams, and get salary hike of around 40% while changing jobs.
Apart from temptation to take up better salary offers, some of them are also disappointed at new promotion policies at employers such as Infosys, and are quitting for better roles.
Management advisory firms such as Zinnov say increased demand for project management skills, which are still scarce in the country, is driving the attrition.
A lot of these services firms have had a number of new projects come in over the last six months. In most cases, the key differentiator that has won the vendors these projects is their ability to deliver quality and meet stringent SLAs.
The ability to meet deadlines, effectively manage resources and change requests are crucial for the success of a project and hence retaining clients.
“Good project management talent with significant experience of handling different types of projects and clients is hard to come by, and hence the demand for such resources,” said Karthik Ananth, director at Zinnov Management Consulting.
“Though there are certification programs on project management, there is no short cut to learning the nuances of managing a client, project resources, etc. to effectively to meet client expectations.
Hence, the desire is always to lateral hire such talent and this in turn is impacting attrition,” Ananth added.
Already, Infosys Technologies and HP-Mphasis are hiring back the staff they let go during last year’s economic crisis, in order to get the talent back.
While Infosys launched its ‘Green Channel’ initiative for wooing back the talent, smaller rivals such as Hewlett Packard-owned MphasiS have launched a programme called ‘Homecoming’ for hiring back the employees who left the company during past few months.
Some experts such as E Balaji, chief executive of MaFoi Randstad say that smaller firms are likely to get more impacted because larger rivals are able to retain project managers with higher salaries but also because of their brand value.
“Currently, the attrition rate is around 20% in the IT sector for the project managers. In the IT sector, it is a big number and smaller firms would get impacted if the project managers join the larger firms.
However what is seen is that larger the firm is, the more it gets candidates on its brand value and not necessary the pay package,” said Balaji.