Competition for skills from indigenous services vendors such as TCS and Wipro, international players such as IBM and Accenture, and the captive operations of multinational companies, continue to soar, with the 50 largest global IT services vendors adding more than 172,000 new staff in India last year.
But with all manner of incentives and increased salary packages being offered to lure programmers, developers, and consultants from one company to another, it is increasingly difficult to retain the best people.
At the recent EMRG Business Process Outsourcing conference in London, an outsourcing veteran from global oil giant BP said staff attrition rates had become a major problem on the company’s contract to outsource its central SAP accounting system. IBM and Accenture are the suppliers, with much of the support work being handled by the vendors’ operations in India.
David Beaney, who recently retired as director of commercial services at BP, said quarterly staff churn on the project team had reached 25%, significantly higher than the 15% employee turnover rate that industry body Nasscom says is the average for India’s largest software services vendors. He said: This is a real problem. If it carries on at this rate, there is not going to be anyone left who knows what they’re talking about in a few years time. Good SAP skills are in high demand.
Another financial services company ComputerWire spoke to at the event said that in its most recent quarter, it had suffered a churn rate of 23% on the project team at a third-party Indian supplier running some of its transaction processing functions. Attrition levels are even worse in India’s business process outsourcing space, with Nasscom putting the average at 30%-plus. The organization claims that the cost of this attrition in the industry is 1.5 times the average salary.
BP has 114 full-time employees supporting its SAP system from offshore centers in India, consisting of 70 from IBM and 44 from Accenture. Once the vendors began supporting the system from India two years ago, Beaney said there was a one-year payback on total transition costs, with annual savings of 50%.
