Attrition in ITeS verticals gives staffing firms a headache

MUMBAI: In the last two months, Rajni Gupta has put on weight. Thanks to the 27-year-old’s move from her previous organisation, a staffing company where she handled the IT and ITeS verticals. “It was mad! Once, a software engineer and a customer service executive, recruited by me, left in a month. My replacements for the posts didn’t last much longer. I was on the lookout for replacements again. This time, the software engineer stuck around, but I was still short of a customer service executive as the previous one quit within a week. My frustration was rising,” says Rajni. However, that’s the story for most staffing firms today.

Attrition in the IT and ITeS sectors has had a ripple effect, this time, on staffing companies. As a result, consultants are finding it harder to meet targets. Almost a quarter of recruits in the ITeS sector quit within three months. Most companies try to replace the staff for clients within three months. However, this period varies with seniority.

It may be from one to three months for a junior to mid level executive while it can be six months for a mid to senior executive. “The financial impact is that sometimes though the fee is for one recruitment, we actually place two candidates,” says Manpower India executive chairman Soumen Basu. Manpower India has 500 consultants, half of whom are in the IT and ITeS vertical.

The only way to ensure a steady supply of candidates is by keeping 2-3 CVs as back-up, says Akash Bali, a senior associate in the IT vertical of a search company.

Further, like in any other job, these consultants have to meet targets that are carried forward in case they underachieve. The targets are calculated not by number of recruitments, but by the revenue generated. It’s simple. Senior recruitments bring higher commission (professional tax is levied on the recruit’s CTC, which could be 8.33% to 16% depending on the seniority). “We need a mix of various positions,” adds Mr Bali. “For example, recruiting five people in a quarter is good and it’s better if three of them are at a junior level and two are mid to senior levels.”

Most staffing companies have targets that could increase by 7% quarter on quarter.Recruitment is season based and the maximum action is mid-year when companies tend to over hire. However, Manpower’s Basu says there is no seasonality in junior level recruitment as it is need based. “

At the year-end, recruitment for mid to senior levels slows down as budgets are being prepared and it’s the holiday season. Also, candidates prefer to wait for incentives given out during January-February,” he adds.

However, Ma Foi MD Pandia Rajan, says that attrition in the industry doesn’t affect attrition in the vertical. “We don’t have the standard replacement clause. The reason why people quit from this vertical is because they get ample opportunities in organisations, especially the ones they work for and it’s their dream to move on,” he says. Almost 2/3rd of the people moving out of this vertical join corporates, he adds.