There is no magic bullet to this problem. This has been a burning issue for several outsourcing firms and many of them have used innovative methods to retain talent. My observations looking for the some of the biggest reasons are manifold. The scorching market for job seekers during the last decade (it has slowed down a bit during the last two years) was among the biggest cause. When there are fewer talented job seekers to fit a rising wave of outsourcing from west, the tendency to jump ship for wage increase is immense, this was so rapid that recruiters often sat outside their outsourcing rivals poaching on their trained pool often just asking for their last payslip and giving them a fat raise and an immediate offer to join. Some firms have been paid the severance that the old employers applied, or dangled carrots in various forms to entice them to quit.

The recruitment teams are not trained as well to screen the candidates, the evaluation was poor to identify bad hires before they start. Sharing of information on why someone left their last job was just not available. All the recruiter was looking for was short cuts to fill their open slots that went begging with billing tied to them for incentives.

If there is one platform all the outsourcing companies join hands it is this one. So much that they have joined forces to share information on candidates via a common database that provides lot more information than the background verification.

Again some level of attrition is expected – somewhere in the range of around 10% is okay since you do want to hire some fresh talent, swap skill sets, etc. However the range of 20% and above which was the case for couple of years steadily is not acceptable. Outsourcing firms typically follow the pyramid model where they want to keep very talented, employees that follow their culture and willing to building a long term career. They welcome resources to leave that are underperforming and those that don’t fit into their scheme of things.

Attrition is also caused by lack of good Infrastructure where an hour to two is spent commuting each way, lack of transportation facilities e.g. Bus, Car, lack of amenities in the buildings, poor leadership on teams, not so meaty assignments where resources get struck with dumb roles just because they continue to be billable and client likes them do the same thing till they need much against their career aspirations. Also remember the resources pool is often in the age group of anywhere from 21 to 35 which forms the highest block and they often are moving targets with marriage or joining spouses, going for higher studies, migrating to other cities or changing professions, venturing into self-employment etc. One more reason is not finding an onsite assignment, come to think of it, a very small percentage of the large pool gets to go onsite, so the rest are left to finding it on their own often moving into firms that won large contracts recently or are known to rotate their resource pool.

The rate of attrition at all levels of outsourcing providers in several hubs has seen a fall in the range of 25-50%, in the last two years, mostly due to a fragile global economy. An uncertain global economic environment, together with cross-currency fluctuation. This has compelled employees to adopt a wait-and-watch policy, leading to a sharp decline in the attrition levels in the IT-BPO sector, which has been grappling with a talent crunch due to a shortage of competent managers at the middle and senior management for quite some time. This has led to a fall in hiring activities, bench strength and a high employee retention rate can been seen at almost across all levels of management.

It has come as a blessing in disguise, considering that human resource is the key to the success of this knowledge-intensive industry. Employees are wary of switching over jobs due to continued apprehensions of the economic slowdown being likely to continue for some more time till the economy really warms up and Europe gets back on its sound footing. The fact that is not likely to happen very soon means outsourced providers can breathe some relief with lower levels of attrition till it lasts.

Bottom-line there is no one good reason why this attrition occurs, often several of the above play a factor, sometime there are one or two dominating factors that nudges the percentage a bit either for good or bad.

Clients can alleviate some of this by providing a conducive environment, treat the consultants on par with their own employees, encourage their consulting pool to achieve the same levels as their own, provide work life balance, conduct surveys to find out what makes them tick, bridge gaps by encouraging visits from both sides, provide rewards and recognition, competitions to encourage their show of talent, rotate resources to keep them motivated – there are many more creative ideas that clients use to keep their consulting pool from their outsourced providers ticking which directly translation into billing efficiencies.

In one of my next blogs I will throw more light on how this subject means hidden costs.