Employees have emerged as the key asset for companies engaged in the information technology and related services. But, frequent job-hopping and a high attrition rate have become a key deterrent for this growth story, even as the entire talent pool is getting smaller compared to the high growth rates coming their way.

With an aim to tackle this crisis, the companies are now encouraging their employees with cash incentives and other rewards to refer friends and acquaintances for jobs with their organisations.

According to the industry experts, 30-60 per cent hiring is already being done through this channel, which originally started in the US and other Western countries and is now catching up fast in India.

“We are hiring more than 32 per cent of employees through referrals,” Nasdaq-listed Indian BPO service provider EXL Services’ Vice President and Global Head of Human Resources Deepak Dhawan told PTI.

“The process saves a lot of time and cost that the company would otherwise need to spend while recruiting through conventional channels,” Dhawan added.

On upswing

“Hiring through employee referrals is on an upswing with about 50 per cent new employees being sourced through this method,” Xansa India’s Senior Vice President (Human Resources) Vikram Karayi said. Xansa is a UK-based outsourcing and technology firm with over 8,000 employees in the UK and India.

Employee-referral is a policy for encouraging employees, usually through cash incentives, to nominate potential job candidates and is part of the overall recruiting process. “More than 60 per cent of the recruitments we do are through the referral channel titled ‘Bring In Your Buddy’ scheme,” domestic IT firm Patni Computer Systems’ Senior Vice President (HR) Deepak Khosla said.

The practice has helped Patni save costs on hiring advertisements it had to place for attracting candidates, he added. “While in a walk-in interview, only one out of the 10 candidates interviewed on an average is found suitable, the conversion rate through referrals is much higher with close to six out of ten candidates qualifying to fit the profiles,” EXL’s Dhawan said. With EXL facing an attrition rate of close to 41 per cent, this scheme comes quite handy, Dhawan added.

“Referrals save on hiring time and cost, helps in identifying rare skills in the market and most importantly leads to longer stay of the employee as he or she is well acquainted with the company’s culture,” Xansa’s Karayi said.
At Xansa, nearly 42 per cent of the hirings done for IT services are through employee referrals, while the ratio surges to 58 per cent in the hirings done for its BPO division.