Wednesday, July 20, 2016

How attrition is hitting Contract Staffing firms hard !

Attrition is a bane for any company, more so for IT services - Contract Staffing companies.

We recently did an in depth analysis on how it is hitting bottom line of the booming contract staffing industry in India.

A case study was done  on a Company which has roughly 1100 resources which are billing as on 1st Jan 2016 servicing more than 20 clients spread across India.  The margin was maintained at 20% net of expenses, with average billing of Rs.50,000 translating into decent top and bottom line of the company.

The business outlook looked extremely promising and the Management felt confident of achieving a 25% growth for the year 2016.

A review was held on 30th June 2016 when the Managers met, it was a set of shocking numbers and the following impacted the operations.

A robust addition of 226 was indeed remarkable in view of stiff competition.
A high attrition of 35% resulted in dropping of head count by 192 has rattled and made a big impact negatively on the revenues.
Net addition was just 34 for 6 months roughly translating into just 6 resources.

Let us study what is its impact of high attrition -

  • Replacement cost of 12% 
  • Loss of Billable head count for 192
  • Refill for the lost positions was measured at 42%

5 top reasons -

  1. Direct employment with MNC / top Indian IT Services companies
  2. Mismatch of expectations from hiring manager
  3. Lack of technical skills
  4. Low job content
  5. Better pay and work environment

Recommendations -

The study has thrown interesting facets of attrition management of staffing industry and we have given 5 areas to improve.

Get in touch with us for consultation of how attrition can be reduced by taking simple and cost effective measures in your company.  Feel free to reach me at 9880080321 or you can mail me at

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