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A Study of Employee Retention V/S Demographic Variables in IT-Units of

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www.ijemr.net ISSN (ONLINE): 2250-0758, ISSN (PRINT): 2394-6962

Volume-5, Issue-1, February-2015

International Journal of Engineering and Management Research
Page Number: 96-103

A Study of Employee Retention V/S Demographic Variables in IT-Units

of Pune City
Yogita Gupta1, Dr. Ajay Kumar2, Dr. Seemarani3
1
Assistant Professor, SIBAR, Pune, INDIA
2
Director, JSPM’s JICA, Pune, INDIA
3
Visiting faculty, Tilak Maharashtra Vidyapeeth, Pune, INDIA

ABSTRACT available in the hands of the human resources. Securing

Success and failure of any organization depends
on its human resource. Global explosion in business creates
more opportunities, so people are highly mobile and not
restricting to particular job. IT Industry, being a
knowledge-based industry, a high intellectual capital lends
competitive advantage to a firm. In IT, there are lots and
lots of avenues and opportunities available in the hands of
IT employees. The retention problem is highly persisted in
IT industry. The shortage of manpower both in numbers
and skills is a prime challenge for HR managers in IT-
units. The compensation, career planning and technological
obsolescence are the facts for employee turnover in IT-
Units. There are many other factors which influence
employees to leave but HRD need to understand employee
expectations from the organization, which can make them
to stay long back and perform well. The demographic
details of the IT professionals should also be considered
while designing the retention strategies as some of these
variables have proved to have influence on retention. The
objective of this paper is to understand that, is there any
relation in frequency of job change with growing age and
does different retention factors influences on different age
group . The result of this study shows that retention factors
are same in the different age groups and number of job
changed is not constant in different age group. The study
area is selected IT-units in the Pune city.
Keywords---- HR Practice, IT Industry, Attrition,
Employee Retention.
I. INTRODUCTION
In this knowledge age, human resource is
considered as the most important resource of the
organizations and retaining them in the organization
becomes significant for success of that organization.
With all round development in each and every area of
the economy and there is stiff competition in the market,
so there are lots and lots of avenues and opportunities
and retaining skilled employees plays an important role
for any organization, because employees’ knowledge
and skills are central to companies’ ability to be
economically competitive.
Employee turnover is perceived in a number of
different ways. Employee turnover refers to the number
or percentage of workers who leave an organization and
are replaced by new employees. The turnover can be
Involuntary, Voluntary, Desirable and Undesirable. The
most common reasons for leaving a job are ‘poor salary
and benefits’, A lack of training and development
opportunities, Dissatisfaction with management, Not
getting along with colleagues, The journey to work, Lack
of work/life balance.
However, the Information technology industry
is young and, retention trend has yet to be instituted.
Acquiring the right people is rather easy and simple but
retaining talent resources in the jobs for which they are
hired is much difficult. The expanding global job
opportunities, get highly attractive and remunerative jobs
elsewhere and highly attractive terms and conditions of
employment offered are simply motivates the employees
to leave their current jobs. They are also attracted by the
career and other opportunities available and provided
globally within country as well as outside the country. A
qualified IT employee also finds the opportunities up the
hierarchy very fast which they wants to grab. In this
industry, the knowledge workers/ professional
employees constitute the most important resource for an
organization must be retained.
The sector has increased its contribution to
India's GDP from 1.2% in FY1998 to 7.5% in
FY2012.According to NASSCOM. IT the sunshine
industry of India that contributed a major share towards
the GDP (6.4% in 2011) of our country had faced with
the challenge of retaining people as the attrition rate was
high. In FY12, IT industry has witnessed an average
attrition rate of 17-25% as compared to other sectors in

96 Copyright © 2011-15. Vandana Publications. All Rights Reserved.

www.ijemr.net ISSN (ONLINE): 2250-0758, ISSN (PRINT): 2394-6962
India like manufacturing, banking and others, which is
about 8%. It was also observed that the attrition has
dipped down in FY12 from FY11 (55-60%)according to
a recent industry specific survey carried out by the
Associated Chambers Of Commerce and industry of
India (ASSOCHAM). From the survey it was found that
the dip in attrition rate is due to the rise in retention and
employee satisfaction programmes undertaken by IT
firms, but this has to be reduced further.
In India IT companies are concentrated in
certain places like Bangalore, Bhubaneswar, Cochin,
Coimbatore, Chandigarh, Chennai, Delhi, Gurgaon,
Hyderabad, Calcutta, Mysore, Madurai, Maneshwar,
Mumbai, Noida, Pune and Trivandrum. Pune – IT
Industries has been the home for majority of the software
development companies and organizations both of Indian
origin and firms formed as the IT wings of leading multi-
national companies. During the last two decades Pune
has grown into a destination for both the IT sector
entrepreneurs and the young engineers and professionals
wanting to make a career in the IT industry. But it is also
a fact that the industry has been facing the problem of
high rates of employee attrition due to the sudden growth
of the industry and simultaneous scarcity of the qualified
manpower in the changing environment. This rate has
varied from year to year and from IT-unit to IT-unit.
The IT-units are competing with one another in
terms of their employee friendly policies and practices
aimed at attracting and retaining potential workforce as
there is acute shortage of skilled IT professionals. This is
because the above situation has bred highly demanding
and egoistic workforce who leave or threaten to leave the
Organization even at the slightest discomfort and join the
competitor Organization. Job-hopping is a common
phenomenon among IT professionals. This is a costly
affair for the Organization as stated by Fitz-enz (1997)
and will affect the bottom lines. This has posed a
challenge to HR professionals of IT Organizations to
design effective retention strategies keeping in view this
delicate situation.
The retention of high performing employees has
become more challenging for managers as this category
of employees frequently move from one job to another
as they are being attracted by more than one organization
at a time Michael O. Samuel and Crispen Chipunza
(2009). However the reason for employee turnover
varies from one Organization to the other and from one
person to another as they are not getting what they
expect from the Organization (Ongori, 2007). Mobley
(1982) and Dickter, Roznowski and Harrison (1996) also
called for more research and theory pertaining to how
the turnover process occurs overtime. Retention of the
employees reduces the cost of the product, increase
productivity and condense brain drain of the particular
unit. A high rate of turnover affect the organization
directly and indirectly in many ways like lead to loss of
more expenses, loss of company knowledge, interruption
of customer service, as well as the goodwill.
97 Copyright © 2011-15. Vandana Publications. All Rights Reserved.
Retention and Motivation of personnel are major HR
Challenges for Indian IT Industry today. It has been
observed that the average tenure for an IT professional is
less than three years. Further, the use of new
technologies, the support of learning and training, and a
challenging environment ranked higher than competitive
pay structures as effective retention practices. Integrating
HR strategy with Business Strategy: The strategic HR
role focuses on aligning HR practices with business
strategy. The HR professional is expected to be a
strategic partner contributing to the success of business
plans, which to a great extent depend on HR policies
pertaining to recruitment, retention, motivation, and
reward.
Coping with the Demand-Supply Gap, the shortage
of IT professionals are global in nature and not peculiar
to the Indian software industry alone. For India, it is
predicted that in the year 2013 almost 450000 IT
professionals will be required (Strategic Review Reports,
NASSCOM). Attracting the Best Talent is another
challenge. In a tight job market, many organizations
often experience precipitous and simultaneous demands
for the same kinds of professionals. The Indian software
industry suffers from a shortage of experienced people
such as systems analysts and project managers, and
attracting them is a key HR challenge.
Up-gradation of Skills through Re-training: Rapid
and unpredictable technological changes, and the
increased emphasis on quality of services are compelling
IT businesses to recruit adaptable and competent
employees. IT professionals themselves expect their
employers provide them with all the training they may
need in order to perform not only in their current
projects, but also in related ones that they may
subsequently hold within the organization.
II. LITERATURE REVIEW
When an employee leaves he takes away with
him all company information such as ongoing projects,
etc. Goodwill of the company gets hampered due to
more employee turnover rate and the competitors start
poking their nose to recruit best talents from them.
Efficiency of work is hampered to a large extent. If an
employee leaves in the middle of an ongoing project its
very difficult to fill that Vacuum and a new employee
can never replace an old and talented employee and this
leads to delayed completion of projects and less work
satisfaction among other team members.
The reason for employee turnover varies from
one Organization to the other and from one person to
another as they are not getting what they expect from the
Organization (Ongori, 2007). Mobley (1982) and
Dickter, Roznowski and Harrison (1996) also called for
more research and theory pertaining to how the turnover
process occurs over time. Costly et al. (1987) points out
that a high labour turnover may mean poor personnel
policies, poor recruitment policies, poor supervisory
www.ijemr.net ISSN (ONLINE): 2250-0758, ISSN (PRINT): 2394-6962
practices, poor grievance procedures, or lack of
motivation. All these factors contribute to high employee
turnover in the sense that there is no proper management
practices and policies on personnel matters hence
employees are not recruited scientifically, promotions of
employees are not based on spelled out policies, no
grievance procedures in place and thus employees
decides to quit. Resrarchers such as Cascio(2003);
Heneman and Judge(2003); Gberevbie (2008) have
agreed that an organization’s inability to formulate and
implement strategies capable of recruiting competent
employees and retaining them to achieve organizational
goals is one of the main challenge facing organizations
in the area of performance.
Arnold and Feldman (1982) devised that
turnover intention can be influenced by many factors
such as job satisfaction, age, tenure of the job,
organization commitment, perception of job security and
intention to switch a job (Lee et al., 2010). Furthermore,
Mobley et al., (1979) presented some other factors which
indicated employee’s turnover intention and these factors
are “promotion opportunities”, “centrality of work
value” and “peer group interaction” (Lee et al., 2010).
Lee et al., (2010) finally derived these factors which
influence the turnover intention of the employees i.e.
organizational culture (enterprise style, leadership style),
job stress (work load, work atmosphere, interaction
between upper management and employees), work
characteristics (working hours, work attributes, work
interest), promotion (promotional opportunities,
repositioning, fair allocation), salary and compensation
(compensation, employee benefits, reward system,
retirement system) and quality of work life (work
environment, work atmosphere, interaction with
colleagues), (Arnold and Feldman, 1982; Mobley, 1982;
Mobley et al., 1979).
The other factors that influence employee
turnover in Organizations include the individual work
variables like demographic variables, integrative
variables like job satisfaction, pay, promotion and
working condition (Pettman, 1975; Mobley 1982; Arthur
2001) Demographic factors cannot be ignored as age,
tenure, level of education, level of income, job category,
gender have influenced employee retention and have
been found to have stable relationship with turnover
intention.
Price & Muller (1981) observed that job
dissatisfaction influenced actual turnover indirectly
through its direct effect on turnover intention. The
variables that affect job satisfaction are pay, promotion
opportunities, immediate supervisor, fringe benefits,
contingent rewards, rules and procedures, relation with
co-workers, type of work done, and communication
within the organization.
Walker (2001) identified seven factors that can
enhance employee retention: (i) compensation and
appreciation of the performed work, (ii) provision of
challenging work, (iii) chances to be promoted and to
learn, (iv) invitational atmosphere within the
98 Copyright © 2011-15. Vandana Publications. All Rights Reserved.
organization, (v) positive relations with colleagues, (vi) a
healthy balance between the professional and personal
life, and (viii) good communications. Together, these
suggest a set of workplace norms and practices that
might be taken as inviting employee engagement.
workplace factors such as rewards, leadership style,
career opportunities, the training and development of
skills, physical working conditions, and the balance
between professional and personal life have an indirect
influence.
Gardner et al., (2004) were of the view that pay
is considered as a motivator as well as employee
retention technique. Milkovich and Newman (2004)
have clearly stated that among all types of reward,
monetary pay is considered one of the most important
and significant factor in retention. In a research by
Moncraz, Zhao and Kay (2009) it was concluded that
although compensation was not one of the top factors
influencing non-management turnover but compensation
can act as a critical factor in reducing managerial
turnover and increasing commitment.
It was found in the survey that recognition is
important for workers and they want to listen that their
work followed recognized and appreciated. Silbert
(2005) forwarded the view that reward is important
because it has an enduring impression on employees
which, in turn, gives the employees an impression that
they are valued in the organization.
Prince (2005) argued that talented employees
are required for maintaining a competitive advantage and
employees want career growth opportunities to develop
and rise in their career ladder. Work-life balance is
increasingly important for engagement and affects
retention. Hyman et al., (2003) According to Miller,
Erickson & Yust (2001), employees get benefited by
work environment that provide sense of belonging.
Wells & Thelen (2002) have stated in their study that
organizations which have generous human resource
policies, have a very good chance to satisfy and retain
employees by providing them an appropriate level of
privacy and sound control on work environment which
enhances the motivation levels to commit with the
organization for the long term. Ramlall (2003) stressed
the need for recognizing the individual needs of an
employee in an organization as it will encourage
commitment and provide a suitable work environment.
Demographic factors cannot be ignored as age,
tenure, level of education, level of income, job category,
gender have influenced employee retention and have
been found to have stable relationship with turnover
intention. The above demographic factors were found to
be negatively related to turnover intention (Arnold &
Feldman, 1982; Cotton & Tuttle, 1986; Gerhart, 1990:
Mobley et. Al, 1979; Price & Mueller, 1986; Wai &
Robinson, 1998; Weil & Kimball, 1995); level of
education is positively associated with turnover, the
turnover occurs over time, so. HRD must changes in
their HR practice. If you don't want your best people
walking out the door, you'll need to build a proactive
www.ijemr.net ISSN (ONLINE): 2250-0758, ISSN (PRINT): 2394-6962
retention strategy that meets their individual needs for
career development, recognition, and work-life balance.
A Company should exert some effort and
undertake some analyses to determine the non-monetary
interests and preferences of its key employees. Effective
human resource management must be practiced at both
strategic and day-to-day levels.
III. STATEMENT OF PROBLEM
In this era of globalization employees are
blessed with good opportunities. A lot of small and big
industries have come into the market, and therefore a
major segment of youngsters have selected their
profession in IT sector. When so many IT industries are
available, employees have an option of changeover their
job very frequently. Pune – IT Industries has been the
home for majority of the software development
companies and organizations both of Indian origin and
firms formed as the IT wings of leading multi-national
companies. During the last three decades Pune has
grown into a destination for both the IT sector
entrepreneurs and the young engineers and professionals
wanting to make a career in the IT industry. But it is also
a fact that the industry has been facing the problem of
high rates of employee attrition due to the sudden growth
of the industry and simultaneous scarcity of the qualified
manpower in the changing environment and technology.
This rate has varied from year to year and from IT-unit
to IT-unit and place to place. Handling the employee
retention issues has got a serious attention at all level of
management in IT units. The problem of employee
retention has hit on all categories of employees and
different age group equally.
IV. OBJECTIVES OF THE STUDY
The retention in IT industry is vibrant, due to
fast changes in Information Technology and industries
are engaged in different technology, accordingly there is
a shortage of skill human resources.
The main research objectives are:
1. To study on employee turnover in IT-units with
special reference to Pune city.
2. To study if there is any relationship between job
change with growing age.
3. To find the retention factors influencing on
different age group.
4. To obtain the best possible suggestion to contribute
in management practices for retention.
V. HYPOTHESIS
Hypothesis- H1: There is a significant relationship
between employee’s age group and number of job
change in IT-units.
99 Copyright © 2011-15. Vandana Publications. All Rights Reserved.
VI. RESEARCH DESIGN
Research Design: The conceptual model of the
research is based on the literatures review and the
theoretical framework of the hypothesis consider. The
structured Questionnaire directive approach has been
considered. The Questionnaire is divided in two sections
that are Background Information and Research
Questions to test retention reasons for job changed in
different age groups and average job hopping in different
age groups. To test the hypothesis, Descriptive Analysis
(Mean & %), and Non-Parametric–Tests, Pearson chi-
square test, Cross tabulation and one way ANOVA were
applied.
Sample size: Sampling population and area
taken, is segregated in and around Pune (Hingiwadi IT
park, Magarpatta, Koregoan, Rajiv Gandhi IT park
PCMC). Sample Frame is IT-units (MNC, big and small
units) listed under Pune Maratha Chambers of
Commerce and Industries and Agriculture (MCCIA)
have been considered. Out of around 402 IT-units in
MCCIA, 42 IT-units taken for the study. The total
approximate populations were 6000 employees in these
402 IT-Units. The sampling technique used for study is
simple random sampling and 600 employees were
approached for data collection.
Respondent type: The IT employee, who has
left the organization at least once, is considered for the
study. The respondent can be male or female, any age
group and any designation with 1 year and onwards
experiences.
Pilot study: In this study, 30 employees from
six IT-units (Capgemini, Tech Mahindra, Cognizant,
Infosys, Sementac and Syntel) have been approached
with the condition that they have switched their job at
least once. The questionnaire were distributed to the
employees who were willing to help researcher in pilot
study considering that within 7 to 8 days they will read
& and return the questionnaire with suggestions. Out of
30 respondents, 25 had responded effectively for the
completion of pilot study and 5 respondents did not
responded due to various reasons, so the response rate
was 83.33%.
Primary Data: During main study, a few of the
IT-units were not ready to corporate, some of them were
closed down, because of which data were collected from
36 units only as considered 42 units during the sample
size consideration. In order to achieve a similar or better
response rate, that of the pilot survey was, the 600
respondents were invited to participate in the main
survey and 576 respondents response were found valid.
The response rate was 96% for the main study.
VII. DATA ANALYSIS AND
INTERPRETATION:
Qualitative and quantitative methods are used
for data analysis. Data are tabulated and charts, graphs
www.ijemr.net ISSN (ONLINE): 2250-0758, ISSN (PRINT): 2394-6962

are used for interpretations. Data were analysed using

Statistical Program for the Social Science (SPSS 12.0) in
windows and Excel sheet for data coding. Demographic
variables are presented to understand the variants.
Pearson chi-square test is done to understand that is there
any relationship between age and number of job
changed, Cross tabulation is done to find out the nature
of relationship between age group and no of job
changed. One way ANOVA is used to come across
difference between levels of retention significance in
different age groups. Quantitative method for
influencing on different retention factors on different age
group.
Respondents and their Demographics: Other than age
group and gender there were more three survey questions
which were related to profile of the employees, including
Industries worked in- MNC or National, current
designation of respondent (Junior Level, Middle level
and Higher Level), their years of experiences (1-5years,
6-10years, 10-15years, 16+ years) at the time of
questionnaire filled. The respondents of the age were
group as 21 to 25years, 26 to 30 years, 31 to 35 years
and 36+ years. The number of job changed by a
respondent are classified as 1-time, 2-times, 3-times, 4-
times and 5+ times All this demographic information are
tabulated in the Table- 1.
2
Table-2, the calculated value of χ (12) =
139.15, P=0.000, N= 575. Since, P value (0.000) is less
than level of significance (0.05), the null hypothesis is
rejected. Hence, there is relationship between age and
number of job changed.
The data was collected from 36 IT-units, out of
which 22 (61.11%) were Multinational and 14(38.88%)
were in National. The Male respondents were 374 out of
576 (64.93%) and female respondents were 202 (35.07
%). The respondent’s position levels were junior, middle
and higher. The junior level employees were
307(53.30%), middle level employees were 224
(38.89%) and higher level employees were 45 (7.81%)
as per Table-1.
In the 576 responses, 1-5years experiences
were 374(64.93%), 6-10years experiences were
173(30.03%), 10-15years experiences were 17(02.95%),
and 16+years experiences were 12(02.08%). The
respondent of age group 21 to 25 years were 198
(34.37%), 26 to 30 years age group were 190 (32.98%),
31 to 35 years age group were 98 (17.01%) and 36+
year’s age group were 90 (16.62%). Numbers of times
job changed by the respondents were 267 (46.35%) for
1-job changed, 145 (25.17%) for 2-job changed, 90
(15.62%) for 3-job changed, 52 (09.02%) for 4-job
changed and 5 & more job changed were 22 (03.81%).

Testing of the Hypothesis-1:

H1: There is a significant relationship between
employee’s age group and number of job change in IT-
units.
Chi-Square test with Level of Significance (=
0.05) is used to test the significance and the result is
tabulated in Table-2. Cross tabulation is done in order to,
find out the nature of relationship between no. of job
change and age group, and is located in Table-3.

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Means for age groups in homogeneous subsets are

displayed.
a. Uses Harmonic Mean Sample Size = 126.048.
b. The group sizes are unequal. The harmonic mean
of the group sizes is used. Type I error levels are not
guaranteed.

Table-5: Hoch BergTests for no. of jobs changed under

each group

For the Hoch berg table it can be seen that,

From the Cross-tabulation Table-3, it can be
mean values of job change in all the four age groups
seen that out of 198 employees between age group 21 to
differ from each other. From table-5, the graphical
25 - 63.1% change 1 job, 25.8% change 2 jobs, 9.6%
representation in figure-1 gives clear rate of job hopping
change 3 jobs, 1.5% change 4 jobs and 0.0% change 5
at any age level.
jobs times. Out of 190 employees between age group 21
to 25 – 47.4% change 1 jobs, 30.0% change 2 jobs,
14.2% change 3 jobs, 7.4% change 4 jobs and 1.1%
change 5 jobs times. Out of 98 employees between age
group 21 to 25 – 40.2% change 1 job, 20.6% change 2
jobs, 19.6% change 3 jobs, 15.5% change 4 jobs and
4.1% change 5 jobs times. Out of 90 employees between
age group 21 to 25 – 13.3% change 1 job, 20.0% change
2 jobs, 27.8% change 3 jobs, 22.2% change 4 jobs, and
16.7% change 5 jobs times.
Hence, it can be observe that, with the
growing age group the possibility of job hopping
increases.
One way ANOVA Test: One way ANOVA with Level
of Significance (= 0.05), Independent variable (Age
group) and Dependent variable (Number of job changed)
is used to test if the mean for number of job changed is
different across various levels of age groups. Robust
Tests of Equality of Means is tabulated in Table-4, Hoch Figure-1: Means Plots graph- Age v/s mean of No. of
Berg Tests for number of jobs changed is put into Table- job changed
5.
From the table-5 and mean plots graph of
figure-1, it can be seen that employees between age
group of 21 to 25 changed on an average 1.49 jobs,
employees in the age group of 26 to 30 on an average
1.84 jobs, employees 31 to 35 age group change on an
average 2.22 jobs and employees above 36+ age group
changes 3 jobs on an average.

In order to, find out where the difference lies Results and Analysis of objective : To find the
the Hoch Berg test is used. retention factors influencing on different age group,
Quantitative test method is applied and tabulated in
table-6.
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www.ijemr.net ISSN (ONLINE): 2250-0758, ISSN (PRINT): 2394-6962
Figure-2: Graphical representation on age wise retention
factors influence to leave job.
Table-6 and figure-2 shows that career growth
is the most influencing factor followed by compensation
scheme and management effectiveness in the all age
groups.
VIII. FINDINGS OF THE STUDY
The success story of result shows that with the
growing age group the possibility of job hopping
increases. The age group of 21 to 25 changed on an
average 1.49 jobs as compare to employees above 36+
age group changes 3 jobs on an average.
It is observed that career growth is the most
influencing factor followed by compensation scheme,
work-life-balance and management effectiveness in all
age groups considered in this research.
IX. CONCLUSION & SUGGESTION
In this era of globalization employees are
blessed with good opportunities. As soon as they feel
dissatisfied with the current employer or with the job,
they switch over. If an employee resigns, then good
102 Copyright © 2011-15. Vandana Publications. All Rights Reserved.
amount of time is lost in hiring a new employee and then
training him/her and this goes to the loss of the company
directly which many a times goes unnoticed.
The last decade has seen the initiation of a
Varity of interesting and rigorous studies that account for
some of the complex and dynamic nature of the turnover
process in different types of the industries. Accordingly
HRD has adopted different retention strategies of
different organization for different level. Employee
turnover is very high in IT organizations in India as
skilled workforce has ample number of opportunity to
choose from.
From this study it is found that IT employee of
early age group leave the job on an average 1.49 jobs,
similarly second age group (26 to 30 years) leaves the
job on an average 1.84 jobs and 2.22 jobs for third age
group (31 to 35 years), 3.08 jobs for fourth age group
(36+). Therefore, while designing the retention strategy,
HRD of IT-units should consider demographic variables
also to retain the IT employee of different age group.
The strategy should be different for different age group.
Acknowledgment: We acknowledge Professor DR.
Roshan Kazi for his valuable suggestion and help on
various fronts.
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