PUNE: The $50-billion IT industry may be fighting a fierce war for talent as it tries to claw back to a double-digit growth rate this year. But Pune's Hinjewadi IT park is showing that peace can prevail even among the warring companies. Twenty eight residents of Hinjewadi, including top names like Infosys, TCS, Cognizant and Wipro, that once ruthlessly poached talent from each other, have now agreed to work collectively to reduce attrition.
At their first meeting hosted at the Infosys campus in Hinjewadi last month, CXO-level representatives from all 28 companies keenly explored a no-poach agreement, but concluded it was unviable. However, they managed to seal a pact under which they will hire from rivals only after candidates have fully served out notice periods. Earlier, it was common practice for the hiring companies to pay salary in lieu of the notice period. This worked well for the hirer, but caused problems for the old employer who would not have enough time to find replacements. “We met last month and worked out a broad agenda,” confirmed Mritunjay Singh, the Pune head for Infosys and president of the Hinjewadi Industries Association (HIA). Infosys is Hinjewadi's largest employer with 42,000 on it rolls.
The companies have also agreed that new employees cannot join without a relieving letter from the previous employer. Earlier, it was not uncommon for IT professionals to desert jobs without any notice. And they would have plenty of offers to choose from.
All of this will be spelt out in a ‘code of ethics' that will be honoured by the HR departments of all these companies and by their employees. These 28 companies account for 1,00,000 of the 2,50,000 IT professionals employed in Pune. By the same yardstick, they could contribute at least Rs 19,000 crore of the Rs 48,000 crore worth of software exported from Pune last year, though exact figures are not available. These companies have been crippled by 17% attrition leading to an estimated loss of about 5% of total revenues — about Rs 850 crore — every year, says Mr Singh.
Hinjewadi may account for only 6-8% of the sector’s total revenues, but if this peace experiment succeeds, it might find more takers across other IT hubs in the country. The industry, which saw a net addition of only 20,000 people last year, is likely to add some 90,000 to the base of 2.3 million employees, according to industry body Nasscom.
Already, Infosys has reported an attrition of 16% during the past quarter, the highest in 12 months. Nearly 8,000 employees exited during the quarter, a clear sign of the simmering war for talent.
IT companies in India could be losing close to $2 billion annually to attrition, including loss of productivity and expenditure to find replacement, estimates Ganesh Natarajan, vice-chairman and managing director, Zensar Technologies, and head of the CII's IT & ITeS Committee.
“There is a price pressure from customers and also, from the competition. If we do not arrest this attrition now, our profitability will decrease,” said an official from another company, who did not want to be named as his company was in the silent period before announcing results. "Loss of an employee is loss of knowledge. Finding a replacement and getting him to be productive takes 2-6 six months, which makes it a loss of productivity, too,” Mr Singh added.
Perhaps, the Pune experiment may present the industry with a solution. “The step taken by Pune's IT companies is a welcome move and other companies too should follow them," said Sangeeta Gupta, senior vice-president, Nasscom. “We had published a report on corporate governance and ethics. Many of the steps like not buying out notice period, or not giving joining bonus, are some of the steps we had suggested.”
That's the idea the HIA is pursuing. "We have formed a core group, and separate work groups are also being formed. We have decided that all groups will meet once every month,” Mr Singh added. “Through HIA, we (the 28 companies) have collaborated successfully on initiatives in security, transport and infrastructure. So, why not collaborate even though we are competitors and collectively become better?” asks Mr Singh. When he connected with the other companies, he found they too were keen.
The Hinjewadi peace pact will have a bearing not just on lateral hires, but also on campus recruits. Existing talent in Pune has been absorbed fully. More talent has to come only from campuses. “But those that are fresh out of college have high expectations about salaries, with no seriousness about jobs. Such expectations are being set by the colleges and placement officers, who are not in sync with the developments in the industry,” says Unmesh Bathija, vice-president of HIA.
The 28 companies have formed a work group which will craft a unified communication module on the state of the industry and its talent needs. This will be used by the HR teams of all 28 companies in their interactions at campuses. In some ways, these companies are only trying to fix a problem they had created. Hard-pressed for talent, the IT industry resorted to rampant poaching during the heydays of 2007-08. This time around, as the industry looks to get back to growth, they are trying not to make the same mistakes again.
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