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Why Is Attrition So High In India?

By Keith Warburton

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By Keith Warburton

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Global Business Culture has worked on dozens of offshoring to India projects over the past fifteen or more years with multiple clients from a wide variety of sectors across numerous countries.  These projects have ranged from large-scale transitions through to more modest start-up type activities.  However, regardless of sector, size of project or country of origin of the client, there seems to be one constant headache which keeps reappearing and that is the challenge associated with high levels of attrition.

Of course, all companies in all countries experience a certain level of attrition and indeed, most people would agree that zero attrition is probably bad for any organisation.  Having said that, the level of attrition some of our clients experience in India is simply mind-blowing.  One current client is seeing attrition rates of around 37% as an average across the business – with even higher rates amongst younger new joiners.  While these numbers are excessive, rates in the high twenty-percent bracket are not uncommon.

The recurring costs of recruitment, onboarding and knowledge transfer is enough to eat away at any perceived cost saving which are anticipated from an offshoring project.  The additional costs just mentioned are obvious and easy to calculate – it is the intangible costs, however, which are the real killer.  Nobody calculates the management time and bandwidth this sucks in from the home team or the demotivation which can be felt back in the US or the UK when new people are constantly having to be upskilled only to find they leave after six months.

So far, a less than appealing picture has been painted but I do want to say that for every client who has problems around their attrition numbers, another client can be pointed to who are looking at a stable employee engagement level and attrition rate.

A few fundamental questions need to be asked and answered:

  • Why are attrition rates unusually high in India?
  • So why do some companies manage attrition rates well while others struggle?
  • What do we need to do to ensure our attrition rates are low?

I’ll address some of these issues and a number of related topics in this blog and return to it in a series of articles planned for the future.

The causes of attrition in India

Firstly, people leave jobs in India for all sorts of ‘normal’ reasons:

  • People simply don’t like the work they are doing
  • Individuals get headhunted
  • Employees are dissatisfied with their level of remuneration
  • Lifestyle choices are made – location moves, kids, decided to become a rock star etc.

However, there are a few India-specific reasons which fuel attrition, and which need to be baked into the pie of understanding and these India-specifics fall broadly into two buckets; culture and environment.

Why are attrition rates so high in India?  –  Cultural reasons:

  • Hierarchy: There is no debating the fact that India is an intrinsically hierarchical culture, and this sense of hierarchy permeates all aspects of life – both social and commercial.  This is not a criticism.  Hierarchy is not good or bad; it is simply… hierarchy and many more global cultures are hierarchically oriented than are non-hierarchically oriented.

The problem is that many of the countries who engage in offshoring projects in India are from cultures where flatter organisations are currently in vogue and they try to import their flatter, matrix systems into India.  These flat structures tend to have few levels of seniority which means that promotions and improved job titles are few and far between – and this is often where the problems start.

  • Promotion: Many Indians are ambitious and are looking to move up the hierarchy.  They are basically looking for promotion and if there seems to be few opportunities within this organisation, then better look elsewhere.  When western organisations replicate their flat structures into an Indian context, this allows very little room for upward movement and people therefore start to look around for advancement.
  • Job Titles: Job titles have more significance in India than they do in many western countries these days and when Indian colleagues put a lot of emphasis on their job title or ‘designation’, this issue is not really understood or taken into consideration back at base – in fact, we have been involved with a number of clients who have become irritated and frustrated by this.
  • Metrics: Metrics are a huge challenge from a number of angles but colleagues in India often put great emphasis on meeting any metrics they are set – because regularly meeting metrics is a visible sign of having done a good job – and if you do a good job, you should be in line for promotion.  However, the twin metrics of 97.2% delivery on time and 96.5% accuracy are often in competition and people struggle to meet both.  ‘If I am consistently missing one of my key metrics, then my prospects don’t look rosy her, so I’d better look for a position elsewhere.’
  • Nurturing Culture: Indian’s are collectivist and relationship-oriented which means they are happiest working in an atmosphere that creates a familial feel and where they feel they are accepted and valued as both workers and people.  Many western organisations seem to place little value on this aspect of corporate culture (although they often pay lip service to it.)  In a ‘time is money culture’ social conversation and relationship building are often seen as a waste of time.  This major cultural difference of approach can lead to feelings of dissatisfaction and alienation which can, in turn, drive attrition.

Why are attrition rates so high in India? – Environmental reasons:

  • A Booming Jobs Market: India remains a hot destination for offshoring as a result of a low-cost base, high levels of education, good English and scalability.  These have been drivers of offshoring for a couple of decades and remain drivers.  In addition, the slumbering giant of the Indian economy is rousing from decades, if not centuries, of slumber and all sectors of the economy are growing rapidly and demanding talent.  If you are interested in a candidate – so are 20 other suitors.  This means that good candidates can take their pick and, if they feel like a change of scenery, it is not too difficult to pack up and go.  Retention, therefore, should be a top, top priority.  If you have good people, nurture them, and make sure they feel valued.  (This is true in all countries but is more so in India than almost anywhere else.)
  • Boring Work: Many western businesses sell a downsizing transition to India by telling their employees back at base, ‘don’t worry about this transition to India because we are sending all the low level, boring work to India, leaving you with the sexy stuff.’  Guess what?  Indian employees find boring work…..well pretty boring!  And remember that many of your Indian employees are highly educated people who are looking for fulfilling, intellectually challenging work.  Without a clear career path, you are bound to be hit by attrition.
  • Wage Inflation: As in any situation where demand is greater than supply, prices rise and this is certainly the case in India.  If you do not keep your finger on the pulse of Indian wage inflation, you run the risk of making yourself uncompetitive as an employer. Of course, other factors feed into an employee’s decision to stay or go but few people will hang around if they feel their peers elsewhere are being paid substantially more for the same work.  Salary benchmark frequently – it’s a cost but much less of a drain than high levels of attrition and all the associated cost.

I’ve written some ideas here on one of the questions I posed earlier in the blog (‘why are attrition rates so high in India’ but still haven’t addressed the questions:

  • So why do some companies manage attrition rates well while others struggle?
  • What do we need to do to ensure our attrition rates are low?

I will come back to these questions in a later blog because I know that when properly addressed, the challenges of attrition in India can be greatly reduced.  However, in the meantime please feel free to contact me and I’d be happy to discuss these issues with you.

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Building an Effective Operation in India