INDEX

1. Introduction

2. A Theoretical Framework on Employee Turnover
2.1 What is Employee Turnover
2.2 Concern for Turnover
2.3 Measurement of Turnover

- Separation or Wastage Rate
- Employee Stability Index
- Survival Curve

2.4 Use of Turnover Measurements
2.5 Causes of Turnover

- Classification as Voluntary & Involuntary
- Factors
-Controllable and Uncontrollable under Voluntary Turnover
- Conditions governing Turnover
- Tools which may highlight the Causes of Turnover

2.6 Costs Associated with Turnover

- Related to Skill - Related to Acquired Competencies
- Replacement Costs - Checklist of costs for Manufacturing, Service and IT industry

2.7 Controlling Turnover

- Relating the Controlling Measures to the Causes of Turnover
- Retention Strategies
- Reducing Costs Associated with Turnover

2.8 Summary

3. Findings of Survey
3.1Selection of Sample & Methodology
3.2 Estimations by skill-sets on the following for the year 2000 - Manpower Demand for both Domestic and International market

- Manpower Turnover for both Domestic and International destinations
- Average Survival Period for Experienced Professionals and Trainees

Foreword

There is hardly much literature on employee turnover in our country - probably because this was neither a problem at the firm level nor exciting as a research proposition. Research in Human Resources has been uneven and segmented. Performance appraisal systems and processes have attracted greater attention than recruitment and turnover. The connectivity among the sub-systems has also remained unexplored.

Turnover was not considered a problem due to the sheer size of supply of manpower in numbers and due to reasons of non-competitive conditions. The changes in technology and competition have changed the situation in a short span. To become globally competitive, organisations are now required to examine the quality of resources, compete for them and retain them. Attrition of these resources, especially in knowledge driven firms, impacts on their profitability and competitiveness in several ways.

It is for these reasons that we considered it necessary to launch a short study on this subject for the benefit of competitive firms. Due to lack of adequate literature, substantial amount of original thinking was required. The worth of the report probably lies in this. We hope the report will enable HR professionals to bridge an important knowledge gap and enable them to develop an analytical framework and relevant strategies.

Y.R.K. Reddy

PREFACE

Manpower planning has now become an important component of corporate strategy, especially as organisations have accepted the growing importance of people as a strategic resource. A good manpower plan provides the vital competitive edge for the growth-oriented companies and a survival strategy for those in a defensive mode. Not only have companies accepted the importance of manpower planning, but have come out with a result-oriented manpower strategy. The push for this has been the cost being incurred - cost as a result of loss of competent and skilled workforce in addition to the opportunities being lost due to inadequacy of skilled personnel.

Two viewpoints:
Two viewpoints may be useful to gain a broader perspective in this regard.

Open System Approach
Visualizing the manpower system and the corporate/organisation as open systems interacting with the external environment, we can perceive a scenario where the external economic environment and the corporates make certain demands on the manpower system.

The above demands have certain implications for the effective management of manpower resources. They can be broadly stated as:

• Estimating and identifying correctly the manpower requirements, keeping in view the organisation's strategy.
• Controlling the flows of manpower through the organisation through the use of progressive and innovative HR policies.
• Striving towards a 'learning organisation', so that human resources can adapt to the pace of change on the technological, social and economic fronts. This will have to ensure that skills of an employee represent the sum of experience and individual development, rather than only the initial technical training to take care of replacement.

Dynamic Economic System Approach
Another school of thought views the manpower system as a 'dynamic economic system'.

If conditions bearing some resemblance to perfect competition existed, the level at which supply and demand for manpower would be brought into balance could be strongly influenced by manipulation of price (i.e. levels of remuneration), or could be predicted by reference inter alia to anticipated movements in price." (A.R. Smith - 'Manpower Planning'). This assumes that the pricing mechanism influences the demand-supply dynamics normally observed. Pricing itself is not much of an independent condition as it is influenced by several other significant factors.

The above figure lists some of the probable factors, which influence the manpower pricing system.

By pressure groups we mean, the various influencing bodies like labour unions, trade associations, professional associations etc. These entities possess considerable bargaining power in the course of determining the manpower pricing from time to time, through the strength and sheer numbers of their members and affiliate organisations.

Legal/institutional factors include certain awards, wage settlements, pay commission recommendations, guidelines for issue of stock options etc.

Due to co-ordination problems and time lags, objective information is normally not available to any of the parties. Often, information and estimations generated suffer from biases introduced by interested parties. Thus, we find that in times of expansion the estimated levels of remuneration in leading firms are far higher than reality. When demand is higher than supply, even marginally, the estimated increase in manpower pricing is disproportionately higher. Manpower supplying agencies, individual employees, training institutes and all those who have a stake in supply of skills tend to over-estimate the demand as well as the price for such skills. It is noticeable that during recession, the drop in prices may not be as dramatic due to restriction of information from the same sources.

At the same time, the actual demand and supply for skill-set(s) ought to play an important role in determining manpower pricing. If the demand for a skill-set is currently very high and the market is unable to match this in terms of supply, the pricing for this particular skill-set should go up till such time that the demand continues to rise or the supply catches up with the demand. The Y2K boom is a case in point, where the demand was initially very high but there was a lack of skilled manpower and the salary levels shot up. By the time the supply caught up with the demand, there was no longer a need for these professionals. In another scenario, if an organisation foresees that technology is going to change and the need for manpower cannot be met from the external market, it would be a prudent strategy to create the supply from within the organisation, obviating a very high increase in the pricing system.

Obviously, the dynamics of demand-supply and pricing are complex both at the abstract as also at practical levels. The dynamic economic system approach may be useful as a theoretical backdrop for designing a manpower strategy. This strategy may have to rest on the assumptions contained in the open systems approach.

Manpower Strategy:
Designing a manpower strategy mainly consists of three steps:

• Manpower planning
• Action
• Ensuring linkages between planning and action

Within the framework of manpower strategy, the essential feature is the dynamism involved due to the demand-supply-price relationship. Manpower demand for a company is linked to its growth strategies, market, technology etc. Manpower supply is a function of both internal availability as well as external conditions. Pricing of manpower is directed by the demand-supply vagaries as also other complex factors such as imperfect information.

In a firm where demand matches supply and the external conditions are also stable, the pricing of manpower does not undergo dramatic changes. There will be only incremental changes connected to inflation and wage agreements. A problem arises when the manpower moves out due to external demand (referred to as employee turnover). This disturbance to the steady state causes two major effects for the firm - the pricing system and the cost system.

The pricing system gets affected because the external manpower may have outpaced internal rates of pay, with the result that recruitment from external markets obviously impinge on pay relativities in some manner or the other. Such disturbance in turn could affect the stability of the system contributing, at times, to further outflow of human resources.

Likewise, the cost system (manpower and costs related to people as a proportion of the total cost) which would have been in a stable state under hypothetical conditions gets affected in two ways. The first is the direct/measurable costs are due to turnover and replacement and is closely related to the pricing system. The other is the indirect cost and is less apparent. Direct costs are due to costs of separation, (the salary/wage costs as a proportion of the total cost are now higher), cost incurred during search for suitable candidates, etc. The indirect costs are due to interruption in flow of work, increased learning time of new personnel, delays in execution of orders/projects etc.

Thus, keeping in mind the competitive considerations, organisations, irrespective of their nature of business activity, need to increase their understanding of the dynamics of the manpower system and in particular the outflow of manpower.

1.Introduction

1.1 The IT-industry has recent history in India but has tremendous promise to make the country leapfrog in its global competitiveness. Considering the promise in this industry the labour market has acquired a new dynamism. Expectations of international employment, the lure of high profile service sector and the relatively high compensation system have made IT-industry the first career choice for many. The supply and demand for manpower boomed commensurate with the market changes and computer education has become a sub-industry in itself. As in the case of all high growth industries, there has been a continuous mismatch of supply and demand for manpower in this sector.

1.2 The Government of India also recognised the impressive growth, the country has achieved since the mid-eighties in this sector. In order to make India an infotech superpower, the government set up the National Task Force on Information Technology & Software Development in 1998. The Task Force submitted its 108 recommendations of the IT Action Plan to facilitate removal of all infrastructure bottlenecks and creation of a nation-wide IT culture.

1.3 India is now welcoming into its fold what are known as 'Angel Investors' with the opening of the Bangalore chapter of TiE - The Indus Entrepreneurs. A non-profit organisation which helps budding entrepreneurs with their start-ups by advising on technology, legal and financial matters and also cautioning them of the various pitfalls on their way and how to avoid them. Thus, I.T industry has been at the cutting edge of all that is modern, knowledge based, creative and entrepreneurial - a dream world for entrepreneurs, intrapreneurs and knowledge workers.

1.4 The pace of growth in the industry has been so high, that the manpower has entered into a volatile phase. It is possible that this volatility will reduce in due course, when the growth in the industry is less frantic. It is evident from other industries that such a prospect of plateauing would be sooner if the supply side gears up to the suddenly confronted demand. In the meanwhile, companies in this sensitive sector would have to cope with the unfamiliar situation of demand exceeding supply. Such a situation is rather strange for many Indian corporates, which have enjoyed the free availability of less expensive manpower over the years.

1.5 The IT-industry is characterised by short periods of institution building as well as short cycles in products and technology. In essence, these short periods have some bearing on the manner in which the employees and the employers look at things. It is possible that there is a compression in the time perspectives of all stakeholders in the industry. While such compression may be strategically and technologically imperative, it need not impose similar approach in terms of manpower dynamics.

1.6 Even within these short time frames, the IT-Industry has been debating the best manner in which manpower can be retained. This is primarily for two reasons. The first is that the transaction cost/ cost of acquiring, inducting and maintaining human resources has been continuously increasing. Secondly, many companies have realised that the direct cost of unstable manpower could lead to competitive disadvantages such as high cost, poor quality, migration of ideas, sacrifices of innovation etc.,. It is for this reason that IT-industry has embraced several initiatives to increase the retention of employees while devising methods of their attraction as well.

1.7 This study has been carried to help this strategic sector in the economy understand the dynamics of demand, turnover and retention among different skill sets in the industry.

1.8 It is hoped that this report will help the companies gain a comprehensive view of these dynamics and devise a rational approach to coping with them. It is our observation that most companies have come out with reactive strategies under an illusion of proactiveness. This has arisen primarily due to inadequate information on one hand and shortcomings in comprehending the dynamics on the other.

1.9 There has been a relative dearth of theory and writings on employee turnover. Among the several aspects, subsystems, processes of HR, employee turnover is an under-researched area. This has created a zone of unfamiliarity for many executives. This survey and report will hopefully bridge this important knowledge gap among the HR professionals, particularly in the IT-Industry.

1.10 This report has two main parts, which are in sections two and three.

1.11 Section two deals with the theoretical framework of Employee Turnover covering broad areas such as:

• What is Employee Turnover
• Concern for Turnover
• Measurement of Turnover
• Use of Turnover Measurements
• Causes of Turnover
• Costs Associated with Turnover
• Measures to Control Turnover

1.12 Section three presents the findings of a survey conducted in 40 IT firms in Hyderabad and Secunderabad on:

• The projected Manpower Demand for different skill sets both in the domestic and international market.
• The projected Manpower Turnover for different skill sets, for both domestic and international destinations.
• The Average Survival Period of IT professionals for different skill sets.

2. Employee Turnover - A Theoretical Framework

2.1 Turnover: Employee turnover is movement of people out of a firm. It is usually measured by recording movements out of the firm.

It is normally assumed that a new employee eventually replaces the one who leaves and hence a program of downsizing should be made distinct from turnover.

Turnover is also known by other terms like 'Attrition' and 'Departure Rate'.

According to Bill Gates, CEO Microsoft Corp.,-when it comes to turnover, there are two numbers to watch:

Departure rate at Microsoft is 8.70% compared to the average of American computer companies, which is 20.80% according to 1995 figures.

Attrition rate at Microsoft is 7% compared to the industry rate of 13.70%.

2.2 Concern for Turnover

Till the early 90's, employee turnover was not a cause for concern in the Indian industry. This was mainly due to two reasons

2.2.1 Labour cost was lower as compared to other countries and this condition was perceived as a competitive cost advantage. However this apparent advantage needs to be heavily discounted by the fact that, for several reasons, productivity has also been comparatively low. Therefore, in effect, the output per rupee was lower in India Inc., as compared to the output per rupee in other countries due to low productivity.

2.2.2 Low mobility of labour: Closed economy, heavy subsidies, protectionism and low level of competition were the features of the environment in which Indian industry was operating and continues to do so in some sectors. This kind of environment did not provide opportunities for switching over, for the skilled workforce within the country.

2.2.3 However, with the opening up of the Indian economy with the new economic policy in 1991, India faced the full force of foreign competition in the form of better technology, new products and services, and large financial muscle. Moreover, with the boom in the financial services and the IT the emphasis shifted to the service industry. These sectors soon realised that competitive advantage lies with competent, highly motivated and satisfied workforce.

2.2.4 At the same time, mobility of the skilled workforce increased with more players exerting themselves to attract the best. With more opportunities available, the skilled workforce switched over for better working conditions, better pay, better growth opportunities or a combination of all, pushing back issues like loyalty to the organisation. So, most Indian companies now recognise that because of employee turnover they are incurring a huge cost both in the short term and the long term. There is now a concerted effort to control turnover.

2.3 Measurement of Turnover

Two formulae are in common use for measuring Employee Turnover.

2.3.1 The Separation or Wastage rate: The term separation is used to denote any employee who leaves for any reason. This formula expresses the number of separations during the period (usually 1 year) as a percentage of average number of employees during that period. This can be expressed as:

2.3.2 However, if used in isolation, this formula has the limitation of giving a deceptive interpretation of the stability of employment. For instance, company A may lose in the course of a year, half the people it employed at the beginning of the year whose replacements also leave before the end of the year. Company B, with the same strength of 100; may lose 10 people at the beginning of the year, but their jobs are filled by a succession of people each of whom may stay for less than a month. These two employment situations may show the same percentage of turnover while the former may have lost half of the skilled workers and the latter only 10%. Further, during periods of rapid expansion or reduction in employment, the denominator is affected to give a misleading interpretation of the magnitude of turnover.

2.3.3 The Employee Stability index: This shows percentage of employees who have had at least one year's service. It is usually expressed as follows:

This measure reveals the length of service of employees in an organisation than establishing the mere fact of leaving.

A variation of Employee Stability index is the 'Fringe Turnover index'. It is represented as:

Number of employees who joined and left within one year * 100/Average number employed during the year

This shows the percentage turnover of short-term workers. 2.3.4 The Survival Curve: Another method of measuring employee turnover is to study a group of employees recruited during a certain period and record the rate at which they leave the company. Illustrative Survival Curve:

This can be presented graphically by plotting the percentage leaving against quarterly periods of service. The result is called a survival curve and may be particularly useful in analysing the patterns for management trainees, executive trainees and engineering/technical trainees.

2.3.5 A useful application of survival curve computation is the determination of 'Half life' survival rates of workers in various employment categories. A half-life survival rate is the time that elapses before half of a particular cohort of workers who all began work at the same time have left the organisation. Half-life survival rates may then be compared for different departments, age groups etc. in order to ascertain 'staying power' of each cohort.

2.4 Use of Turnover Measurements

2.4.1 The separation rate is easy to calculate and is widely used. It also has the advantage of indicating costs because separations and replacements present a considerable expense to the company. It can also be misleading for two reasons:

• Recently engaged employees are more likely to leave than employees with long service are and therefore an increase in separation rate may simply be due to increased recruitment a few weeks previously rather than to a sudden deterioration in employee satisfaction.
• Some jobs may be vacated and filled several times during the year.

2.4.2 The stability index is best used in conjunction with separation rate, showing the extent to which the company is retaining its experienced employees.

2.4.3 Survival rates always show that tendency for employees to leave is the greatest during their early weeks with the company. They are useful in showing if the company is losing large number of employees early in their service compared with a previous period. It is often instructive to compare survival rates in different departments or different employee categories, e.g. by age groups or occupations.

2.4.4 The survival pattern represents a frequency distribution of the length of time for which leavers have survived. These may take different patterns depending on the industry and the economic cycles. However, it is commonly expected that they fit into a hyperbolic curve.

2.4.5 The general shape of survival pattern suggests that the turnover process has three distinct phases:

• The 'induction crisis' during which employees who tend to be mobile leave, particularly due to initial employment shock. The employment shock may arise due to difficulty in adjusting to the organisational culture or perceived difficulty of work or both. It arises most often because of the employee's inability to adjust to the work environment, the alienation perceived from co-workers etc. The difficulty is heightened if the individual has other easy opportunities or if he/she is very rigid in his/her preferences or both. Hence induction training and socialisation programmes assume importance, which are rather neglected areas in most Indian organisations.
• The second phase is that of 'differential transit' when the employees comprehend the organisation and question whether they have a place in it at all. Employees may have adjusted to the work environment. They now question themselves whether they have any growth opportunities in their present organisation and if they do, how long would they have to wait for an advancement. Advancement, in the minds of employees is a combination of promotion, challenging work and remuneration. If they perceive these as slower than expected, they start looking for other opportunities. This is the period when employees would be most sensitive to issues such as subjectivity, unfair treatment, inequity and the like.
• The third phase is that of 'settled connection' when the 'survivors' become established employees. They may have not only adjusted to the work environment, accepted the good and the bad features, some may even be comfortable with the new environment. They like working in their present organisation and believe that they are being given a fair deal for their efforts. They will normally continue in the organisation till such time that they receive an opportunity from outside which the present organisation cannot offer or the desire to be an entrepreneur.

2.5 Causes of Employee Turnover: As seen from the figure given above, turnover may be classified as voluntary or involuntary. Turnover is voluntary when the employee quits on his own, involuntary when the employee has to leave due to health or family problems or due to certain organisational measures like downsizing and dismissal.

2.5.1 Voluntary Turnover: Under voluntary turnover, factors that are controllable and those that are uncontrollable have been identified. It is assumed that an organisation can take steps to remedy the controllable factors within its operating limits as they may be mostly factors internal to the organisation, while the uncontrollable factors cannot be easily remedied as they are mostly factors external to the organisation. However, these factors are not mutually exclusive and at times, one may affect the other.

2.5.2 Factors Controllable and Uncontrollable:

2.5.2.1 Controllable Factors: They can be broadly classified under the following:

• Working Conditions
• Career Planning & Development
• Compensation
• Organisation culture and policies

  Working Conditions: Working conditions include the surroundings where the employees work like ambience/décor, adequate lighting facilities, transport facilities, food/canteen facilities, physical comfort while working, ergonomics etc. For instance, where transportation is weak and individual contingencies are not recognized, employee dissatisfaction would be high.

  Career Planning & Development: These include opportunities internally for vertical growth in terms of positions within the same company as well as in the subsidiaries and associates, opportunity to develop and acquire new skills by working in leading edge technologies or off-shore development projects and access to training. (It has been observed that, given a chance, software professionals would prefer to work in product development oriented companies). Most employees look forward to promotions, even if they are notional. Designations have also been high in the priority for employees, as these determine their social status.

  Compensation: It refers to absolute and relative compensation received by the employee. Absolute compensation means perception of the employee that he/she is fairly paid for the efforts and skills. On the other hand, relative compensation refers to the perceived equity between the efforts-rewards ratio of an employee when compared with the efforts-rewards ratio of others acting as reference points. It includes monetary and non-monetary rewards and benefits including the employee retention schemes of the company (mostly extrinsic rewards). Where the perceived differentials are undue, employees tend to rectify the situation themselves by moving to other organisations.

  Organisation Culture & Policies: Software professionals prefer organisations which encourage innovation and creativity, which have objective and transparent appraisal systems, which ensure that people of high caliber are recruited, promises made at the time of recruitment are kept, which have a flat structure accompanied by a high degree of empowerment, where good work is recognized and appreciated. Organisational policies also have a bearing on the company's public image. It is also possible that at times, a higher standing of a company due to performance reasons makes people believe that organisational policies are good. The desirability to leave comes down if the employee feels that he/she is working for a 'good company' or for the 'best company'. Thus, a company that has attained the stature of an industry leader often creates an additional exit barrier for the company. The contrary situation, increases the desirability to leave.

2.5.2.2 Uncontrollable Factors:

• Lure of the Foreign Market: The prospect of international demand for Indian skills is likely to increase in the coming years particularly for I.T., finance, banking, insurance and consulting services. This is due to the process of globalisation, integration of financial markets and most importantly the explosive developments of information transacting. Obviously, domestic companies will find it difficult to compete with dollar denominated salaries.
• State of the Industry: If the industry is in a growth phase, job opportunities proliferate thus increasing the chances of turnover. In case, economic recession strikes back, there may be a need for downsizing. The financial services sector is an illustration. It went through a frantic growth accompanied by hefty salary increases and quick changes. When the industry faced crisis, the immediate fallout was massive downsizing. As mentioned earlier, IT industry is going through a growth phase, where the demand far outstrips supply and in some sense, this is an uncontrollable factor. Further, if recession hits any segment of the industry there may be downsize manpower in that skill segment. Y2K work is a case in point.

2.5.3 Conditions for Turnover:

• Opportunities available for turnover: This implies that jobs are available easily within the same industry or another good industry. For instance, in the case of the IT industry, opportunities are many, since it is witnessing a growth phase even during a period of general economic slowdown. The opportunities are higher in those skills that are required across industries, if there is a general boom in the economy. On the other hand, the opportunities for specific skills would improve if the growth were specific to that industry.
• Desirability for turnover: The desirability to leave one organisation for the other will be high if the employee is dissatisfied with the present organisation. The dissatisfaction could arise from a single factor or a combination of more than one factor viz., relationship with the superior, compensation, work environment etc.

  March and Simon in their analysis of employee mobility say that - internal factors (i.e within the company) influence the employee's readiness to seek new employment and external factors (i.e external economic environment) affect the employee's ability to find a new employment. It is possible that, even if the desirability to leave is low, the employee might still leave if the opportunities are there. This is characteristic of any industry going through a 'boom' phase. At the same time, if the desirability to leave is high i.e., the dissatisfaction level is high, the employee may not leave, if the opportunities are restricted.
  
  The ES-OD matrix developed by Ashok Chanda and Shilpa Kabra in their book- "HR Strategy-Architecture for Change" gives another perspective to employee turnover. The matrix gives an idea of the different situations arising out of different levels of employee satisfaction and organisation development in an organisation, assuming all other factors/conditions are in a stable state.

The first quadrant indicative of the least conducive HR environment is characterised by high employee turnover. The collective bargaining mechanism is a common feature of this state. There is high resistance and low receptivity to change. This state indicates less productive companies, low employee satisfaction and poor organisation health and identifies volatile organisations.

2.5.4 Tools which may highlight the Causes of Turnover An organisation may investigate the reasons for turnover internally with the help of the following:

• Exit Interviews: Exit interviews are a powerful information base for understanding turnover. Edwin Flippo says - they may provide one last opportunity to discover the nature of an employee's complaint when he/she resigns. It is generally difficult to get valid information through exit interviews. The non-directive type of interview is usually preferred. If the employee is quitting because of some dissatisfaction with the company, he/she is usually very reluctant to discuss it, because in certain cases, references for the next job may be required from the present organisation. Hence, the exit interviewer must exercise skill in getting to the true reason for the resignation, and often, the interview itself does not reveal the reason. It is possible that, if the cause is a minor one and can be remedied the chances of retaining the employee are bright.

  Others advocate a combination of the questionnaire-cum-interview methodology, so that information/data recorded in the questionnaire may be substantiated through the interview. The data thus obtained should be collated and analyzed on a periodic basis (preferably every 6 months) to study the reasons for leaving. The analysis can also be carried out for different sub-groups in the organisation such as different age groups; department wise; grade/level wise etc., to obtain a clearer picture.

  Some of the objectives of an exit interview are:

  • Possible improvement of personnel policies
  • Celebrating/reinforcing the good policies
  • Counselling of the employee
  • Attempt to identify weak supervisors within the firm
  • General public relations
    
    
• Employee Satisfaction Surveys (ESS): ESS is a widely used technique to gather information regarding employees' perception of organisational issues, policies and practices the like. The rationale underlying these surveys is that they provide objective information (data) to the company to introduce the required changes and/or validate existing practices and policies.

  The objectives of undertaking ESS are:

• To learn the importance employees attach to different aspects of work situation.
• To identify the factors that determine the employee satisfaction and morale.
• To assess the level of employee satisfaction and morale and to enable the management to respond with policy measures and interventions.

The assumption behind ESS is that a satisfied employee gives his/her best performance. However, what causes employee satisfaction and dissatisfaction has been an issue of debate and research for a long time. Questions like whether satisfaction causes performance or performance itself results in a satisfied and motivated employee or some intervening or causal factors determine the relationship between employee satisfaction and performance are issues still open for research.

• Special Industry Surveys: These surveys commissioned by a company or group of companies within the same industry may through light on:
  • The average compensation levels.
  • Preferences/opinions of employees on a host of issues like work environment, compensation, company image, career advancement etc.
  • Employee perception of work in other companies of the same industry.
    
    

  

2.6 Cost Associated with Turnover:

In any organisation, the task of calculating turnover in terms of the separation rate or the average survival time should not be viewed as an end in itself. In addition to finding out (investigating) the cause of turnover, the management should also be concerned about the cost it incurs due to such turnover.

As given in the figure above, the costs associated with turnover are classified by the following:

2.6.1 Related to Skill
2.6.2 Related to Acquired Competencies
2.6.3 Related to Replacement

2.6.1 Related to Skill: The costs with relation to skill can be very high where the skills and practices are not standardized in the market place. By standardization of skills we mean that the training received by a candidate in an educational institution or a technical training institute forms a good fit with a given role in an organisation. This can be illustrated by the skills required for data entry operation, which are standardized in the market place. There would be several data entry operators who have acquired the skill and the loss of one data entry operator may not be very serious if there are others with similar skills available. It implies that if there is adequate availability of manpower and skills are well crafted and standardized, the associated cost will come down.

The above figure gives an idea of how the two factors - availability of manpower and standardization of skills, influence costs due to departure and recruitment. When the availability of manpower is high and the degree of standardization of skills is also high, the costs due to departure and recruitment are relatively low since the skills are not very specific to the company and at the same time there is a ready supply of manpower. When the availability of manpower is low and the degree of standardization is low, costs due to departure and recruitment might be relatively high since the skills are highly specific to the company and individuals possessing such skills are not easily available. When availability of manpower is high and standardization of skills is low, cost due to departure is relatively high as critical tasks might be held up even if costs due to recruitment are relatively low. In such a situation organisations should aim for a greater standardization of skills through the institutionalization of personal knowledge and recording of innovative and creative processes. When availability of manpower is low and standardization of skills is high, cost due to departure is relatively low as a temporary internal replacement may be found or the tasks being held up may not be critical. Cost due to recruitment is relatively high as demand far exceeds supply in the market. As organisations probably cannot do much to change the external situation of manpower supply, they may try to improve their succession and contingency planning in order to reduce recruitment costs.

There are two components of skill:

• Training
• Experience
  
  
• Training: Training includes the basic training owned by an individual in terms of his education and the training provided by the company in the form of off-the-job training, or supervised on-the-job training. The non-productive costs of trainees are based on an anticipated learning curve or learning period.
  
  
• Experience: Experience means the time spent by an employee at working on a similar job or similar platform/package/technology tool, in his/her previous company or the current company. This factor has close relation to standardization of skills also. If there were a good standardization of skills, normally the quality of experience gained would also be similar. In such a scenario, if manpower is available, vacancies can be filled easily at relatively lower costs.

2.6.2 Related to Acquired Competencies: Acquired competencies are those which are accumulated over a period of time while working on the job. These are mostly specific to the company and are not easily quantifiable. However they assume importance in the light of the fact that they cannot be easily replaced from the market. The problem is enhanced when individual knowledge and operational innovations are not translated, captured and internalized by the company. In most organisations, employees would have discovered unique ways of solving problems, shorter ways of accomplishing tasks and unusual situations or contingencies. These remain in the knowledge domain of the individual unless there is an effort by the organisations to institutionalize them.

Following are some components related to Acquired Competencies:

• Relationships with Customers: It is an agreed fact that for the growth of a business, retaining customers/clients is important. Nurturing relations with clients is as vital as delivering high quality products/services on time. Hence, if an employee associated with a client leaves the link between the company and the client is temporarily broken. This broken link manifests itself in the form of a hidden cost.
• Technology specific to the company: Technology may either be technical or management related. These competencies are acquired only after working for a certain period of time in the company and are continuously reinforced. For example, an employee working in the exports division of a marketing department will learn over a period of time, of what price to quote, up to what level they are negotiable and the dynamics of individual negotiations with the company's customers. Since the degree of standardization associated with these competencies, is normally low, the cost associated with them could be high.
• Multi-skilling: The cost incurred due to turnover is high whenever an employee performing more than one role leaves. This problem is accentuated when the employee has been performing these roles with equal competence. Role enlargement implies that a basket of skills is required. The greater the phenomenon, greater would be the cost associated with turnover as, a perfect fit from the market would be difficult to secure.

2.6.3 Related to Replacement: These include costs incurred when:

a) An employee is in the process of leaving
b) The employee has left
c) There is a process of finding a replacement
d) The new recruit takes time to adjust to the new work environment.

They may be explained as:

• Cost of recruitment, selection and induction in the form of advertisement costs, fees paid to consultant and time spent in recruiting.
• Foregone Costs:
  • Direct, which arise due to employees' absence till a replacement is found.
  • The learning and bonding time of the new employee. While learning time is self-explanatory, bonding time refers to the time taken by the new recruit to familiarize with the surroundings and gain the confidence of his/her colleagues.
  • Withdrawal cost: This refers to the fact, that an employee who has decided to leave or is in the process of leaving will tend to show less enthusiasm in his/her work and may not get involved in new projects. Often, time is also lost in discussing the separations by various people.

Additionally, these may result in delay of projects (which may attract penal clauses) and/or loss of customer goodwill.

2.6.4 Following gives a checklist of the possible sources of costs associated with turnover, so that, managers may arrive at a cost for their specific organisation.

2.7 Controlling Turnover Various studies have given different rates of turnover in the IT industry in India, stating it to be around 20-25% ranging from as low as 8% to a high of 40%. In the light of, the various costs being incurred by organisations due to turnover, particularly in the IT industry, it would be logical for managers to take steps to control the rate of turnover. Given that turnover cannot be zero and is also not desirable, turnover rate needs to be brought down to manageable levels.

2.7.1 Relating the Measures to the Causes of Turnover Before any measure is selected with an aim to control turnover, it is very important to ensure that it addresses the issues that caused turnover in the first place. For instance, if one of the main causes of turnover is the ever changing shift system to which the employees are not able to adjust, it would be useless to hand them stock options just because every other company in the industry is going for it. Our research studies have shown that the three most important factors (in the order of importance) that motivate IT professionals are:

• Career Growth
• Compensation & Rewards
• Opportunities for Skill Advancement
  
  
• Career Growth: This has been ranked the highest, even higher than compensation. It is possible that I.T professionals see it as an inclusive concept. Which means that it also results in higher rewards. It was observed that IT professionals expect a fast pace of promotions accompanied by increase in pay, responsibility and a higher designation. These expectations appear to be determined by the frenetic growth in the industry, which has been much higher than any other industry at any time in history.
• Compensation & Rewards: This is really a stand-alone factor. IT professionals will continue to expect and demand high pay as long as there is a market demand for their skills and the industry continues to enjoy a growth phase. Even otherwise this is a generally expected motivating factor. The only exception could be those industries facing recession where, employees may rank security of employment as more important than compensation.
• Opportunities for Skill Advancement: They assume importance, as this is what will keep I.T professionals employable i.e., increase their shelf life in their organisation or in the marketplace. It provides them the opportunity to move up the value chain.

Bill Gates also says - "Employees important to us are owners of the company and make a lot of money through our stock options plan. They tend to have the financial freedom not to work. We have to work particularly hard to make jobs interesting because pay-cheques don't motivate our best people. Fortunately, smart people like to work with smart people, and on products that have a big impact. But keeping them is, definitely an ongoing challenge for me."

It is recommended that organisations need to take up a two-pronged approach to controlling turnover - through the help of Retention Strategies and taking steps to Reduce the Costs Associated with Turnover.

2.7.2 Retention Strategies:

• Compensation and Performance Linked Bonus:

  Compensation is a big motivator for IT professionals particularly as they become symbolic of success. As Collins says in "Human Resource Management Audit" - The reward system is important in attracting and retaining employees of the required quality, underpinning the drive to improve performance, and supporting the ability to change. Hence, organisations should ensure that compensation packages are on par with industry standards. Domestic companies however face the limitations of competing with dollar denominated salaries. An organisational policy that rewards merit/performance is a sound retention strategy.

  When implementing this policy, organisations should ensure a fair amount of transparency. Employees should not feel that favouritism plays a role in this reward system. If employees receive even a hint that favouritism and not merit is the determiner for the bonus, it would demotivate rather than motivate them.

• Subsidised Loan Schemes: Many companies offer Housing, Vehicle, Asset Building Schemes and other Miscellaneous subsidised loans. They take advantage of the fact that concessions on interest are not taxable. To make these effective as retention strategies, a clause is added that a penal interest would be charged if the employee leaves the organisation before a predetermined period of time.

  In the case of housing loans, for example, if the company's cost of capital is 18% p.a., they are offered to employees at say 4-8% only. Some companies have back-to-back arrangements with HDFC where by the organisation picks up the difference between the interest charged by HDFC and the concessive rate in the company's scheme. Similar is the case with vehicle loans, which are either concessional or purchase loans. In the past there were schemes for leasing of the vehicle and eventually selling it to the employee at book value. This will be attractive so long as the market values are higher than the book values. Miscellaneous loans given for the purposes of medical needs, marriage etc., are either interest free or at low interest loans. Some companies give other asset building loans as well - such as for furniture and computers at concessive rates of interest.

  All the above, however, imposes substantial cost on the company. Only those organisations with large resources at their disposal can go in for these measures. The relation of these schemes to keeping employees satisfied or prevent them from leaving is not yet known. However, more number of organisations appear to be using these as mechanisms to attract employees, as these are getting to be an industry norm. Very high loans at very low rates of interest have certainly created barriers for exit, as experienced in the banking industry. (For instance, a Rs. 30 lakh housing loan at 2% p.a. interest and lease back of the property can be a formidable retention strategy).

• Rewards and Recognition in Non-monetary forms: Efforts should be made to appreciate employees' good work with help of 'Recognition Certificates', 'Celebration of Achievements' or a simple and sincere note of appreciation. This helps in public recognition of the individual and may dampen the enthusiasm to leave.

  The down side to this is that, if these are perceived to be unfair in selection, those left out may find the desirability of leaving going up.

• Inflation of Designations: It has been observed in India, that people place a premium on the designations they hold. A hierarchical system is preferred and monetary gains may be ignored to a certain extent in favour of designations connoting a higher position. Where designations are inflated there could be a barrier for exit for some. For example, an employee working with a designation of 'Vice-President' would not like to cross over to an organisation where his designation is Senior Manager, unless the organisations are very different in size, character and reputation.

  The downside to this is that the employee may expect inflation in his pay along with inflation in the designation. For instance, an individual designated as vice president may expect perquisites normally associated with a functional head of a large company.

• On-Site Opportunities Abroad: Most IT professionals, given a chance would like to work abroad. Turnover is likely to increase on this count. Some organisations have built a system whereby the employees' desire to work abroad and earn dollar income is satisfied by providing periodic opportunities to work on-site, on deputation to a customer or on lien.

  The down side to this is that on-site opportunities may make crossing over to other companies easier for the employee, because of proximity to companies based there. Additionally, the selection of people for such on-site opportunities must be objective failing which the impact on those left out would neutralise the positive benefits.

• Strong Team Relations: The degree of team cohesiveness determines to a large extent the level of turnover in an organisation. If an employee enjoys good relations with his colleagues/team members, the inclination to leave an organisation decreases.

  However if a team member decides to leave either for better opportunities or to start a new venture, he may take along other members of the team. Further, there is often an excitement associated with turn over. When one member of the team is excited to be leaving the company, the others in the team may want to follow suit, mistaking the excitement to the actual prospects. Thus, sometimes, when one member of the team leaves, others start searching for alternatives too. This is sometimes referred to as the "bandwagon effect". "MindTree" the much talked-about IT venture started by former employees of Wipro, headed by Ashok Soota is an example of this phenomenon.

• Skill Development: Many a time, development of skills is a prerequisite to career advancement. Although it may not necessarily or immediately lead to career advancement in terms of promotion, it imparts a sense of security to the employee. According to an article in 'Human Capital' (Jan 98) - 'Keeping Pace With Tomorrow' - "It is not employment that IT professionals worry about but employability. They quit organisations if they feel they have stopped learning on the job, that they are not being equipped to meet the future." Organisations that offer continuous skill enhancement may be able to satisfy their employees better as their currency is ensured. However, the downside is that because a company is progressive in developing the skills, it also becomes a prime target for poachers unless there are other effective barriers for exit.

• Career Planning: Career planning reduces the uncertainty for the employee and can be a good retention strategy for a growing organisation. It will enable the employee understand himself/herself, his/her prospects much better. Career planning may not work as a retention strategy in itself. But it can be a powerful reinforcing mechanism especially if the company is growing.

  The down side to this is the practicality of career planning in an industry, that changes in technology, methods, software etc., at a rapid pace. Predictability being low, the quality of career planning and its validity becomes difficult.

• Employee Stock Options/Variants of Stock Options: Stock options give employees the right to buy shares of the company in which he is working, at a fixed price for a number of years into the future. Since stock options impart a sense of ownership to employees, they are motivated to working towards increasing the stock value. Normally, stock plans are aimed at attracting and retaining employees. Retention is assumed, as there is service lock-in. The service lock-in prescribed in most schemes in operation is 3-5 years.

  However stock options, as a retention strategy will not be successful in the case of organisations, which do not enjoy high valuations. There is also the possibility that it may turn into a hygiene factor (lose its novelty) if all members of the IT industry start offering it. Further, when the industry is growing at a fast pace and demand for skills is high, competition for resources heats up so as to demolish retention schemes. For instance, under conditions of high demand, competing firms are prepared to make a valuation and compensate the candidates for the forfeited options/shares.

• Service/Training Bonds: This practice is widely prevalent in non-IT companies also, although its legality is questionable. In this case the organisation takes a bond from the employee that he/she will serve the organisation for a given period of time (say between 1 to 5 years), failing which, he/she will have to pay compensation to the organisation as provided for in the bond. There is also the practice of retaining the original certificates of the employee in order to exercise control over the employee's departure.

  The practice of service bonds has been criticised as being unfair to the employee and illegal as, it is one-sided in favour of the employer. However, courts of law have held this practice as valid where the employing organisation has invested in the training of the employee. This practice may keep away talented candidates from an organisation. Some organisations have limited these bonds to trainees only and provided a rationale that there is cost being incurred by the company on his/her training. Though service bonds are popular, the down side is that the organisations have to suffer loss of credibility, since, companies which rely on service bonds, are not treated as progressive. Consequently, the concern for retention through bonds may have an adverse trade-off with attracting good people.

• Incubator Programme for the Staff: Business incubators started in the 1970s in USA. Their development was guided by 3 factors - the desire to make use of abandoned factory buildings, funding from government bodies to promote entrepreneurship at major universities and initiatives taken by entrepreneurs and investors to transfer their venture experiences to new companies to encourage innovation and creation of wealth.

  Business incubation programs provide a wide variety of services with the intent of fostering the growth of young firms and helping them to survive and thrive. The main goal of an incubation program is to produce successful, viable, and free-standing businesses usually within two to three years. The specific services that are provided by a given business incubator, of course, will vary. However, generally you can expect that an incubator will provide:

• Management assistance
• Access to financing
• Exposure to business and technical support services
• On site office space
• Access to equipment
• Shared office services

Businesses focused on information technology are likely candidates for incubator tenants. Examples of types of businesses include those involved with photonics, fiberoptic technologies, photoelectric materials, computer hardware and software, etc. The supportive environment of the incubator is particularly well suited for businesses dealing with rapidly changing technologies. (NBIA web page, celcee.edu)

The concept of business incubators has been internalised by organisations and is being used as one of the modern retention strategies today. The prospect of retention occurs as the company is prepared to encourage intrapreneurship and gives scope for self-expression to talented employees. If the product/service developed by these employees proves to be successful in the market, it would be mutually beneficial.

According to a report in 'The Economic Times' dated 28/09/1999 -"Setting up software incubator programmes is soon becoming a way to reward employees. With most companies offering comparable salaries and issuing stock options, setting up incubator programmes has become a way to attract the best talent. An incubator programme is akin to venture capital funding except that it funds seed capital and also offers managerial support to start-up companies." MNCs such as Computer Associates and Chennai-based Cognizant Technology Solutions started the trend in India. Recently, Satyam Computer Services Ltd., Hyderabad has also taken up this programme.

2.7.2.1 Retention strategies cannot be uniform for all conditions. A portfolio of strategies may be needed depending on the situation. Some situations may not require aggressive retention strategies but other types of organisational interventions. This is depicted in the directional matrix given below.

According to an AIMA study report published in 'Business Today' (July 22 1999), on 'Retention Management':

• Junior management level is most vulnerable to poaching; turnover rates range from 7% in the manufacturing companies to 13% in hi-tech organisations. That's because junior managers typically experience more problems related to fit and culture than their senior colleagues. They are also more susceptible to monetary inducements at this stage in their careers.
• Most junior managers who work in IT and telecom companies look at every job they hold as a learning experience that will increase their market value, and prepare them for the next.
• Unlike other industries, hi-tech companies insist that their strategies must focus on retaining all employees. The reasoning being - given the high costs involved in mid-career hires, especially in the software and telecom companies, it does make sense to create an environment where all their employees can continuously upgrade their skills-sets rather than let go of them.

As per the survey, the most popular retention-oriented initiatives include:

• Increasing the organisation's level of professionalism
• Moving from family to professional management
• Making performance appraisals objective
• Involving employees in the decision making process
• Ensuring a match between authority and accountability
• Measuring employee satisfaction
• Achieving a match between individual and organisational goals
• Designing a competitive compensation package
• Increasing organisational transparency
• Promoting employees from within
• Helping employees acquire new skills
• Offering stock options
• Focussing on welfare measures
  • Across industry-types, as per this report, increasing the organisation's level of professionalism, instituting an objective appraisal system, and ensuring a match between responsibility and authority are the most-used techniques to improve retention. In addition IT companies focus on 3 more techniques: increasing employee satisfaction, designing competitive compensation packages, and involving employees in decision making.
  • The essentials of retention management, as per the report, include objective appraisal and good pay-packages.

   

2.7.3 Reducing the Costs Associated with Turnover

Despite the best efforts of an organisation it might not always be possible to keep the level of turnover low due to factors not under its control. In such cases an organisation could direct its attention to reducing the costs associated with turnover. There are two central strategies for reducing the costs associated with turnover.

• Succession Planning: Deserving junior employees should be groomed to take over senior positions, so that in case a vacuum is created when an employee leaves the organisation, the transition is smooth. This may not necessarily reduce the learning time drastically, but the bonding time is greatly reduced or practically absent. Moreover, the organisation saves on head hunting costs. Succession planning can be of two types, immediate and long term. The need for immediate succession arises due to the death or resignation of a key employee. To take care of such contingencies, some organisations have predetermined formats, which help in the selection of an internal candidate for the vacant position. These formats ask information about - the eligible candidates, the conditions to be satisfied so that they may qualify, whether any training is required to increase the suitability of that candidate for the role and if a single candidate is not found suitable for the given role, whether the given role can be divided. In case of long term succession planning, an individual or groups of individuals are groomed/trained to take over the position of an employee due to retire in a period of 2-5 years.

  The downside to this is that, the prospective successor may become impatient to succeed and if it doesn't happen soon enough, may find a position elsewhere.

• Knowledge Management: As mentioned earlier, the cost of replacement/turnover is high when the standardisation of skills is low (high degree of specialisation or the technology is specific to the company). Therefore, an organisation can reduce costs by documenting these skills/competencies. This would make them less personal and more integrated into the system. This would serve as guidelines to the new employee and drastically reduce the learning time.

  Knowledge generation is an ongoing process in any organisation. This is either institutionalised or personal.

  Knowledge may be institutionalised by the following mechanism:

• Existing knowledge is standardised and institutionalised by policy documenting plans, procedure manuals and guidelines to tackle routine as well as unique situations.
• Areas of discretion will have to be examined and standardised by some process.
• Problems which have been innovatively solved or when processes have been effectively implemented, they should be institutionalised for sharing with other business units/employees.

Knowledge management helps by:

• Decreasing the proportion of personal knowledge as compared to institutional knowledge
• Promoting knowledge sharing so that eventually knowledge workers enjoy working in such an environment.
• Reducing the areas of discretion
• Reducing the learning time of the new incumbent.

However, care should be taken that this process does not suppress the creativity of an individual. Although it remains debatable whether it can reduce an employee's bonding time with his colleagues, this can be taken care of through well-designed induction programmes.

2.8 Summary:

2.8.1 Understand the nature and state of the industry in which your organisation is operating.

• Whether the industry is in 'boom' or 'recession' phase?
• Which skill-sets are in demand?
• Which skill-sets are critical (for the growth) to your organisation?
• Which skill-sets are more vulnerable to turnover?

2.8.2 Calculate the turnover in your organisation and compare it with the industry benchmark.

• What is the industry benchmark for the rate of turnover?
• What is the rate of turnover in your organisation?
• Do you have an internal benchmark, which you would like to achieve?
• Are the costs incurred by your organisation, due to turnover, high enough to warrant an investment of time and resources in controlling turnover (Cost-Benefit Analysis)?

2.8.3 Viewed from a long-term perspective, if the industry slows down, would the organisation be burdened with high cost employees considering the high compensation packages?

• What is the opportunity cost of being unable to accept a project because of non-availability of personnel?
• What is the cost of hiring more people than required in anticipation of turnover?
• What is the cost of training a new recruit who has come in as a replacement?
• What is the cost incurred due to delay in execution of projects or in product development on account of mistakes made by trainees?
• What is the cost incurred due to delay in execution of projects or in product development because an employee has left midway through its completion, which may result in losing customers to competitors?
• What is the cost incurred due to time taken by a new recruit to bond with other employees and to gain their acceptance as a team member?
• What is the cost incurred due to time and resources spent in rebuilding relations with a customer when the employee handling an important customer leaves?
• What are the costs incurred for recruitment and selection in terms of advertisement, fees paid to a consultant and man-hours spent?
• What is the cost incurred due to loss of innovation and ideas, which an employee carries with him that could have benefited the organisation?
• What is cost of opportunities lost due to a low degree of involvement in work shown by an employee who is in the process of leaving?

2.8.4 If yes, investigate and analyze the causes of turnover in your organisation.

• What are the factors causing turnover, which are uncontrollable (those which are external to your organisation)?
• What are the factors causing turnover, which are controllable (those which are internal to your organisation)?

2.8.5 Retention Strategies and Reducing Costs associated with turnover are two approaches to controlling turnover, which have to be used in tandem.

• Are the measures selected addressing the causes of turnover?
• Do the measures selected, form a cultural fit to your organisation?
• Do you have the resources for the implementation of these measures?
• Would you like to concentrate your efforts on retaining all the employees or only those whose services are critical to the organisation?

3.1 SELECTION OF SAMPLE & METHODOLOGY

Of about 100 registered firms in the city of Hyderabad & Secunderabad we selected about 40 on a random basis. For the definition of IT Industry we have restricted to those firms which have exclusive business activity related to a combination of software manpower services. Those companies having training as a related activity and not the sole were also included. In the process, branded training carried out by organisations such as NIIT & APTECH were not included.

A specific schedule was prepared which was used in semi-structured interviews for collection of data. Considering the nascent stage of this industry we realised that historical data would be a constraint. Consequently, estimates had to be collected particularly in respect of demand projection by different skill sets. The interviews were primarily conducted with HR executives and managers. The Project Managers were interviewed, in case of relatively smaller firms where HR department was not in place yet. Statistical analysis was undertaken along with necessary literature survey. The findings of this survey reflect essentially the estimations and perception of respondents in the surveyed firms.

3.1.2 CHOICE OF SKILL-SETS:

The following skill-sets that were predominant in the market were included for the survey. A few more skills emerged in the market soon, on conclusion of this survey (such as e-commerce, LINUX etc.) but did not merit inclusion for methodological constraints.

The skills selected may be grouped under:

• ERP Tools
  • Peoplesoft
  • BaaN
  • SAP
• Application Programming Tools
  • C/C++
  • COBOL
  • IBM mainframe
  • AS 400
  • VC++
  • JAVA
  • CAD/GIS
  • PB/VB
• RDBMS
  • Oracle & Developer 2000
  • Sybase
• Technology
  • LAN/WAN

   

3.2 FINDINGS OF THE SURVEY ON:

• Manpower Turnover Estimates for Domestic and International destinations
• Manpower Demand Estimates in Domestic and International markets
• Average Survival Period for Experienced and Trainee IT professionals

The highest percentage of turnover to domestic destinations is for C/C++ professionals, since the opportunities are greater for them. The reason for more opportunities is that C/C++ is a powerful programming language used to develop user-friendly application packages. At the other end of the spectrum the percentage of turnover is lowest for BaaN professionals, seemingly because BaaN has not been able to develop a substantial market for itself in India.

The highest percentage of turnover to international destination is for the LAN/WAN system network administrators. The turnover is again the lowest for BaaN professionals.

Domestically, the highest growth in demand is projected for IBM mainframe/COBOL professionals. This might be due to the perceived growth in Y2K and Euro conversion business. Growth is perceived lowest in Peoplesoft and LAN/WAN technology as there is not much demand for Peoplesoft domestically and Internet if made reasonably affordable may well replace the need for LAN/WAN.

Internationally, the growth in demand is perceived highest for SAP and IBM mainframe/COBOL professionals (due to Y2K and Euro conversion) and lowest for BaaN professionals.

The average survival period for trainees is estimated to be the highest for SAP professionals maybe due to the long development period of the projects, necessitating perhaps, longer learning periods. Average survival periods for COBOL trainees are estimated to be the lowest perhaps due to the ease with which they can shift to other platforms/languages/packages.

The average survival period for experienced professionals is highest for the Oracle-Dev2000 skill-set, possibly due to longer development periods of the project. It is lowest for Peoplesoft professionals, as the demand for Peoplesoft is primarily outside India and they might leave as soon as an opportunity is available abroad.