The Costs, Reasons, Indicators and Solutions to Churn in India

“I finally got my Indian peer up to speed and we’re working well together. But now he is leaving and I have to start all over again…”

Churn is a big headache in India. The cost of attrition is 18 months’ salary and hiring externally hikes up salary costs by 20%. Aside from the tremendous costs, it has a huge impact on international team performance and satisfaction.

I once met a company in China where churn was so high that they broke jobs down into tasks that took only 30 minutes to train. Churn is not solely an Indian problem but with RPA, job complexities in India are only getting bigger, not smaller.

Since 30-minute job training is not an option, let’s dive into this subject.

What are normal attrition rates in India?

Job-hopping is widely accepted in India. A recent survey by KPMG India shows a 13,4%. attrition rate across industries. In some industries such as professional services however, a 25% rotation every single year is normal. Multiple heads of GBS in India reported an average churn of 17-18%.

Why is churn so high?

Millennials: You’ve probably noticed that your Indian colleagues are very young. On average, Indian employees are 29 years old. Over 50% of the population is under 25. You’re working with an almost exclusively Millennial workforce. So, how do Indian Millennials compare to their peers across the globe?

• Tracking whether you are keeping up with the Joneses and the Kumar’s has become easier than ever. Carlijn Boerrigter at EY found that social media has a huge impact on job hopping. How does your career progress compare to your class mates? The answer is only a mouse click away. Is your career not progressing fast enough? A new job is only one mouse click away, too.
• Job hopping is normal all around the world. Nicole Solleveld from YourConnect found that Dutch Millennials stay in a job for 28 months. KPMG UK reported a maximum tenure of 3 years. The US calls Millennials the ‘job hopping generation’. India isn’t such an outlier.
• Whether a Millennial lives in India, Europe or America, they want to learn, grow and know where their career is going. What is happening on a large scale in India now will be happening in the West, too, as more Millennials join the ranks.
• Once Millennials settle down, they job hop less. In India, that’s at around 30 years of age.

High demand for skills: There are more graduates than jobs in India, so you would expect low attrition. Unfortunately, many Indians received substandard education. Their skills are limited, therefore, and so is their ability to fit into a job. Real talent is in short supply and employers are fighting for it. If you don’t create a career development and compensation path for your talent, someone else will.

Tell-tale signs that your organisation has problems

Check the data: Churn rates vary per industry. Reputable recruitment companies in India know industry data so you can compare your churn to companies in a similar field. They can also tell you whether external factors such as location could be contributing to your churn.

Interview your source: Why are your people leaving? Anjali Raghuvanshi, Chief People Officer at Randstad India, recommends companies hold stay interviews to prevent staff from leaving in the first place. Should they hand in their notice, Anjali finds that face-to-face exit interviews work better in India than an online survey, because you’ll get more genuine answers. Staff often cite personal circumstances: getting married, relocating etc. Sometimes these are genuine. However, medical circumstances are often used to escape the notice period.

Detect a pattern: Anjali always looks for patterns. If almost everyone is citing personal circumstances for leaving, you need to ask yourself why. Is the manager too strict? Once you detect a pattern, alarm bells start should start ringing.

The key ways to retain talent

This graph shows the drivers for retention: what motivates professionals to stay at a company. The thousands of answers can be broken down into age, region, gender, seniority and more.

Source: Global Business Academy’s India e-learning program.

Career growth: With 16%, career growth tops the list for why Indian staff choose to stay with their employer. The older Indians are, the more important career growth becomes. A few points:

• In this age of Holacracy, Western organisations like to reduce hierarchy structures. In India however, organisations with more hierarchical layers and titles create an illusion of growth. The consequence of cutting out layers and titles, therefore, is that staff stay on the same level for much longer. As a result, managers need to do a lot of convincing that staff are growing.
• Anjali advises organisations to provide more clarity on career planning and compensation. Managers lack in informing their employees on how they are doing or where they stand.
• Indian employees usually voice their dissatisfaction with their feet, not with their mouth.

Flexible work schedules plus work-life balance: In India, organisations expect staff to work long hours. As a result, private and work lives are intertwined. Just as employees are willing to work evenings and weekends, they demand flexibility at work to take care of personal matters, go for long lunches or get time off for celebrations. Whilst this is less important for 20-29 year olds, it is increasingly important for 30-39 (22%) and 40-49 (31%) year olds.

Salary: Moving into a new job means an average incremental pay of 25% (Randstad). Indians often support the entire family: spouse, children, parents, school fees and hospital bills. And despite the lower average salaries in India, Mumbai is the second most expensive real estate market globally! In other words: every rupee counts.

Communication and leadership: Indian staff want to be involved in the strategy of the organisation or else they get disengaged (Randstad). Managers need to ensure that staff feel aligned to the vision, offer opportunities to learn and grow, and develop their key talent. In other words: Indian managers need to move from IQ to EQ. However, not all of them have these skills.

So, what do you do when you have a problem in your Indian office?

You have detected a pattern. The issue is internal, not external. Your Indian management says the churn is normal but you don’t think it is. Or you hear a lot of excuses. You’ve asked for action plans but you don’t see results. You have an uneasy feeling that you don’t have a grip on what’s going on.

So, what do you do? Fire people? Accept it?

Before taking any action, you need to check if your global policies work for India. Secondly, you need to understand what you are dealing with. And that means immersing yourself with knowledge about the Indian way of working. You need to be able to answer whether you have the right people – which means this is a case of skill development – or if you have the wrong managers – who are perhaps a little chalta hai, or old school, driving performance but also churn.