Mahindra Satyam fears onsite staff loss as tech market revives

Mahindra Satyam fears onsite staff loss as tech market revives
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First Published: Tue, Mar 30 2010. 10 46 PM IST
Updated: Tue, Mar 30 2010. 10 46 PM IST
Mumbai / Hyderabad: After struggling to retain domestic employees, software services provider Mahindra Satyam—created from the takeover of fraud-hit Satyam Computer Services Ltd by Tech Mahindra Ltd—is now concerned over the possibility of losing crucial staff overseas.
With the global technology market picking up, the company has started rotating “onsite employees”, who work out of the firm’s key markets such as the US and Europe, with workers from India, two senior executives said. It is also expediting this year’s appraisals to hold them back, they said.
But a spokesperson of the firm denied any “alarming change in onsite attrition”.
Hyderabad-based Satyam found itself at the centre of India’s biggest accounting fraud investigation after founder B. Ramalinga Raju confessed in January 2009 to misstating accounts to the tune of Rs7,136 crore. Tech Mahindra bought Satyam in a government-mediated auction in April.
“In a recent meeting, a CXO-level member of the management raised the issue of onsite staff attrition as a matter of concern,” one Satyam executive said on condition of anonymity. “Hiring mood in the US technology market has definitely picked up, opening up opportunities that were not earlier available.”
The CXO level refers to the chief executive, chief finance officer, chief technology officer and chief information officer positions in an IT firm.
Typically, onsite employees are in positions such as delivery heads or account managers that are critical for maintaining smooth relationships with clients. Losing them would limit Mahindra Satyam’s ability to win clients and maintain service delivery standards.
In response, the management has initiated staff rotation, the executive added.
“The management is worried over the current level of attrition, which is nearly 30% now, and has discussed at length the measures needed to effectively contain the attrition, both domestic and onsite, at a leadership council meet,” said a second senior executive who participated in the meeting, but also did not want to be named.
The meeting discussed expediting the appraisal process, which usually runs from April-June every year, he said.
“Given the apprehensions among the onsite employees on their future in the organization and the kind of attractive offers that they are receiving from competitors, the management has responded positively to the idea of expediting appraisal process this time,” the executive said.
He also said rotation of onsite workers was another measure suggested to arrest the attrition.
A company spokesperson said performance-based variable pay, along with salary corrections across employee levels, had given workers confidence. “We have launched career development initiatives to enrich skills and competencies of our associates, which has helped bridge their concerns and expectations and contributed to maintain our attrition levels well under control,” he added.
However, retaining even domestic staff has been a concern for Mahindra Satyam.
Mint had reported on 4 January about Mahindra Satyam’s efforts to contain domestic staff attrition—pegged at about 25% by independent research firms such as Forrester Researcher Inc.—by offering retention bonuses and pay hikes of up to 20%.
Market analysts said the company may have been successful in containing domestic attrition levels.
“We calculate that it (attrition) could have been as high as 30-40% at its peak in 2009, but we believe it has started to subside after Satyam gave salary increments to junior employees in January and announced plans of another round of hikes next month,” Abhiram Eleswarapu and Avinash Singh, analysts with BNP Paribas Securities India Pvt. Ltd, said in a 19 March report.
lison.j@livemint.com
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First Published: Tue, Mar 30 2010. 10 46 PM IST