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Talent war grips India
March 13, 2006 18:52 IST
With the growth of the IT and ITES industry, major players signing multi-million dollar deals and foreign companies offshoring more work to India, the talent war and attrition rates are soaring. Attraction and retention of employees remains a key issue for the IT and ITeS industry, says a Nasscom-Hewitt study.
Performance based pay is gaining ground within the IT industry as most employees view it as an opportunity to earn more, the study highlights.
The Nasscom-Hewitt Total Rewards Study 2005 states that there is growing trend of the industry towards differentiated total rewards practices based on specialised skill and complexity.
Sunil Mehta, vice president, Nasscom said, "The Indian IT-ITES industry continues to chart remarkable growth with an expected growth of nearly 28 per cent by exceeding $36 billion in annual revenues in FY 2005-06. With such growth, the industry is also rapidly maturing and moving towards a higher degree of specialisation in various fields like recruitment, employee rewards and compensation."
Hewitt surveyed over 125 locally and foreign owned companies this year. The study provides insights on Total Rewards in IT and ITES sector.
"Movement to tier II and tier III cities has expanded the talent base, but on the other hand the shift from low-end business processes to higher value knowledge based processes has amplified the challenge of hiring specialised manpower," Nishchae Suri, business consulting leader (Asia Pacific) Hewitt Associates said.
This study also highlights trends in compensation based on location, skill, and process complexity and captures the changing rewards landscape owing to fringe benefit tax.
"Outsourcing companies are now falling prey to increasing wage costs for specialized skills and the need to constantly align reward practices to the market continues," Suri added.
About 48 per cent of the survey partners said that they paid premiums for specialised skills at the hiring stage and the quantum payout was often left upon the recruitment manager's discretion.
Nearly the same number reported that they designed fixed pay ranges and placed employees with hot skills in a higher quartile within the same range. Other methods adopted by the industry to retain such employees were hot skill allowances; sign on bonuses and frequent salary revisions.
"Salary structures are a derivative of multiple factors: skill, complexity, experience productivity goals and special domain or process expertise. Organisations today are therefore striving to align their compensation with their business strategy by linking rewards to these critical factors across all levels," added Suri.
The study also highlights the changing rewards landscape as impacted by the introduction of the Fringe Benefit Tax. As per the study results most organisations in the IT and ITES industry chose to bear the tax burden themselves rather than pass it on completely to the employees.
Highlights of Total Rewards Study 2005
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