BANGALORE: Wipro has rewarded nearly one in five employees with a 16% salary increase, a move India's third-largest software company believes will help it retain its best-performing employees as overall attrition rates increased during the first quarter of the year.
Starting June 1, the average pay-raise for those working at client locations onsite was 2% while it was an average 8% for the rest. But the top 20% among its 1,47,500 employees were rewarded with twice the average increase.
"One thinking when we did the salary increases this year was to do a 'differentiated salary' increase. So we gave more to high performers," said Saurabh Govil, head of human resources.
"We have done it in the past but this year differentiation has been sharper." Some experts believe that Wipro's decision to reward employees whose skills are in demand, including those with expertise in big data and analytics, could become a more secular trend in an industry that is battling high attrition.
"I believe every company will start looking at attrition rates closely and reward them according to the skill sets it needs," said Ian Marriott, VP at Gartner Research.
Wipro saw an increase in attrition to 17% for the three months which ended in June as against 15.7% during the end of the January-March period. Both Infosys and Mumbai-based Tata Consultancy Services, too, saw an uptick in attrition for the first quarter ended June, with Infosys reporting attrition rate of close to 20% while at TCS it was 12%.
"Early trends after the salary increases show that there is clearly a dip in attrition for the high performers," Govil told ET in an interview. "And today, it is lower than the company average and this is clearly good news because everyone would want high performers to stay with the company. But then, I should say it's early days and let's wait for a little time."
For IT companies, the first quarter usually results in an increase in quarterly annualised attrition as more employees leave to pursue further education. But many companies are getting jumpy about losing engineers with what it believes are hot skills and hence, trying different measures to retain them. Infosys has decided to do away with the variable pay component for entry-level employees as it believes it will motivate more employees to stay with the company.
On the flip side, rising wages have also cut into operating margins. The pay raises and stock options to some employees at Wipro hit operating margins by 150 basis points during the quarter.
"I believe every company will start looking at attrition rates closely and reward them according to the skill sets it needs," said Ian Marriott, VP at Gartner Research.
Wipro saw an increase in attrition to 17% for the three months which ended in June as against 15.7% during the end of the January-March period. Both Infosys and Mumbai-based Tata Consultancy Services, too, saw an uptick in attrition for the first quarter ended June, with Infosys reporting attrition rate of close to 20% while at TCS it was 12%.
"Early trends after the salary increases show that there is clearly a dip in attrition for the high performers," Govil told ET in an interview. "And today, it is lower than the company average and this is clearly good news because everyone would want high performers to stay with the company. But then, I should say it's early days and let's wait for a little time."
For IT companies, the first quarter usually results in an increase in quarterly annualised attrition as more employees leave to pursue further education. But many companies are getting jumpy about losing engineers with what it believes are hot skills and hence, trying different measures to retain them. Infosys has decided to do away with the variable pay component for entry-level employees as it believes it will motivate more employees to stay with the company.
On the flip side, rising wages have also cut into operating margins. The pay raises and stock options to some employees at Wipro hit operating margins by 150 basis points during the quarter.
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