The low-skill call centre industry is the worst affected, with smaller BPOs reporting churn rates of 60-100 per cent, while those in the IT industry are 40-60 per cent, say industry experts. Traditional industries like manufacturing, retail and automobiles come next. While front-end employees in retail register a churn rate of 25-50 per cent, manufacturing reports 10-30 per cent.

“Managing attrition in the IT industry is both critical and challenging because availability of skilled professionals form the crux of this knowledge-intensive industry. Attrition rates in the sector are as high as 40-60 per cent and a Nasscom-McKinsey report estimates shortage of half a million skilled employees in the IT space by 2010,” says Sadhana Somasekhar, director and chief marketing officer, Focus Infotech, a strategic IT HR company.

With the phenomenon becoming pervasive in most booming industries, retaining employees is becoming a strategic priority, as churn adversely impacts bottomlines. “For every employee that leaves, the replacement cost amounts to Rs 25,000 for training alone,” explains Jitendra Tanna, director, Rapidigm (a Fujitsu consulting company, which sees attrition of 22 per cent every year).

Partha Iyengar, vice-president, Gartner India, says a shortage of skilled resources in areas like transaction process BPOs can impact revenues hard. “Currently, attrition rates in such BPOs are on the lower side, but as volumes grow, the shortage of resources will become severe. If churn crosses 50 per cent, revenue losses could be as high as 25 per cent,” he says.

While tangible impacts like revenue loss can be measured and reduced through effective attrition planning and forecasting, it is the intangibles that have long-term implications in areas like quality of deliverables, opportunity loss and competitiveness loss, all of which could lead to customer dissatisfaction.

To stem attrition, companies are resorting to strategies like offering tangible rewards, high-quality work content, growth prospects and opportunities for learning and development.

Pune-based Zensar technologies has implemented innovative HR practices like establishing a ‘vision community’, which consists of a group of specially-screened company employees who have an ability to think and strategise. Even the junior-most employee has a say in the company’s growth, as the membership to the community is devoid of any prerequisites, except for the ability to think big.

The company also has ‘good to great’ programmes that include lectures, seminars and other initiatives to align individual goals to organisational goals. With such initiatives, the company has managed to keep attrition at around 20 per cent, against an industry average of 30 per cent.

“We are focusing more on honing our recruitment process to filter the not-so-good fits than we are on churn. This brings down attrition at the core team or critical talent level,” explains Shebu Raphael, head-human capital at Marlabs Inc, a provider of technology services and solutions.

Some companies like Summit HR Worldwide, a recruitment process outsourcing firm, are offering ‘managed services’ that not only help companies find the right talent, but retain it too. “Recruitment agencies often place an employee in one organisation and then shift him to another to rev up their own bottomlines. We offer a year-long guarantee on the employees we place with our clients,” says Ranjan Sinha, chairman and CEO of the company.

Others like Mohanchoti provide referral services that allow clients to verify past data of a candidate. Says Mahindra Pratap, director, Mohanchoti.com, “There are a whole bunch of people who vanish without informing and that hits business hard, because by the time you realise it, you’ve already incurred a loss or lost the business altogether. Through our website, we provide referrals and past records of employees that allow one to make an informed choice and control attrition.”