Attrition in Indian R&D Centers Lowest in 2009

by Manu Sharma    Feb 19, 2009

Zinnov Management Consulting, the management consulting company, released the findings of a study on attrition levels in the MNC R&D industry in India for the year 2009.

The report states that this declining trend in attrition started in the year 2008 and was the lowest ever then, when compared to the previous two years. While it was high in the second quarter (April to June period in case of January to December financial cycle) of the year as compared to the other quarters, it was much under control in most organizations by the last quarter of 2008 (October to December period) due to the economic condition.

Sahana Shetty, senior consultant, Zinnov Management Consulting, said, "This year, most organizations have frozen the salary increase for 2009 and even delayed their appraisal processes in lieu of a better visibility on the economic situation. Most of them have even frozen hiring for the current year, while only a few of them are back-filling for attrition for critical positions."

Throwing some light on trends that they foresee, Zinnov reported that the average attrition rate across product development organizations is at 5-8% and companies are expected to have a lower attrition in the coming months in 2009.

The report stated that when compared to 2007, product companies across India have witnessed low attrition for various levels in 2008, indicating a more positive trend. The junior-level attrition, which had gone up to 7% in 2007, dropped to 5% in 2008. Similarly, middle-level attrition, which was 6% in 2007, also came down to 4% in 2008. Also, 2008 witnessed the lowest levels of attrition when compared to the last two years.

In terms of cities, Bangalore continues to reflect high attrition when compared to Pune and Chennai, as per the report.

Companies might see attrition at the junior levels as engineers might choose to go for higher studies in 2010, if the downturn continues through to next year, highlighted the report. In addition to this, services companies might start competing for senior resources and domain experts as their revenue model/business model might switch to revenue share/fixed priced projects than the current time & material projects.

There is bound to be increased focus on internal capability development programs in varied organizations to help breed productivity, said the report.


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