Feb 18, 2007

Attrition is a blessing in disguise?

Prakash Muralidharan on his blog, Prakash on Software has a post "Nine reasons for software services success"

In that he touches on two people related reasons, and he actually thinks attrition is good !

People say attrition is the big bane of the industry. I think it is a blessing in disguise for the following reasons:
- It helps transfer "people capital" from inefficient companies to the better ones helping the Darwinian cause of weeding out the weak.
- The day is not far when Bangalore will get "Vietnamed" just like New York got "Bangalored". Indian companies would need to learn to let go of people. High attrition lets you learn to handle the people risk better.
-Forces companies to focus on processes to derisk the people issues better. In a commoditizing business, good processes become a basic necessity not a differentiator.
What do you think? Do you agree with Prakash? I haven't worked in an Indian IT services firm for the last 5 years, so am not sure how much attrition costs in rupee/$ terms. While processes are important, the insight a great software engineer or consultant might add over a potential replacement's skill is never to be underestimated.

In fact he touches on this aspect in his next point
With a bench factor of 10% and a training lag of 3 months factored in, it is clear that to make this work, companies need to have a comprehensive attract-recruit-train-staff machine that churns out project ready freshers.