High Attrition rate continue to plague services: ASSOCHAM Survey

Unabated level of attrition rate continues to be plague India Inc spreading fast from IT and
ITes to other service sectors such as civil aviation, financial services, retail and engineering,
according to an ASSOCHAM Eco Pulse Study.

While the attrition rate in IT and ITes sector has slowed by 10 per cent to fall in the range of
25-30 per cent in the year 2007 as compared to 35-40 per cent rate in previous year but the
service sectors at the crucial juncture of their growth including civil aviation, financial
services and retail are facing tough times in retaining their staff.

“ Human resource is the most valuable asset for any company in the modern economy.
Companies would have to not only benchmark the compensation levels and upgrade the
reward structure time to time in order to retain their employees but also have to integrate
human resource management with overall corporate growth strategic”, said Mr. Venugopal
Dhoot, President, ASSOCHAM.

Big time consolidation in the civil aviation sector has fuelled attrition to an unmanageable
level of 46 per cent as the pilots and cabin crew spot opportunities in growing demand by
domestic as well as foreign airlines.

Dearth of professionals, technical nature of operations, increasing finance-KPOs and

attractive salary packages have led to rising job hopping at entry and middle level in the
financial services sector. The attrition level has increased from 32 per cent in the year 2006 to
44 per cent in the current year. Banking, trading and real estates are facing maximum problem
due to the job changing by the human resource.

Massive expansion in the retail sector is accompanied with rapidly increasing attrition rate to
even to the extent of 50 per cent in few cases. The companies now prefer to sign bonds for
three years as they are imparting them the necessary training and specialized knowledge of
retail functions.
Growth in construction activities in the economy has led to surge in demand for engineers,
resulting into increase in their movement across companies at rate of 25 per cent. The
engineering companies are sorting to pay hikes and growth assurance, to curtail the attrition
level.

Level of attrition rate in the manufacturing sector has remained almost same at 20 per cent in
2007 as previous year. The functional areas like those of production, maintenance and safety
controls, bear highest attrition problem.

Loss of intellectual property is one of the most challenging problems faced by the companies
as an upshot of attrition. Hospitality, IT, hospitals, engineering sectors are worst affected
sectors in terms of intellectual property loss especially in absence of any laws to protect
interest of an organization from employee turnover.

The Study has found that the maximum of attrition is taking place among the employees who
are in age group of 26 to 30 years. It found that the segment of employees who are most
vulnerable to change are with experience range between 2 to 4 years.

The most stable chunk of employees is found to be in age 39 to 45 years as they find
themselves to be unsettled in their jobs and companies that they have been associated.

Attrition trend also reveals that women employees are less prone to frequent job changing
than their male counterparts. For every 10 males jumping the fence by changing the job, there
was only 2 females crossing over.

The immediate gains in salary package was found to be responsible for job change in almost
all the sectors, however the growth potential remains an important reason prompting
employee movement.

The recruitment has now become an ongoing process throughout the year. The Average
increase in salaries offered by the companies with new placement range between 25 to 30 per
cent depending upon the salary structure and individual strengths.
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