Following the path taken by most of my friends, my focus would be on IT industry in India. The primary reason given by the firms to enforcing bond agreements is to recover training costs, which is reasonable argument. But the employment bond dynamics have much deeper implications. An employment bond may a powerful tool in implementing a business model a firm chooses. One more observation here is that employment bonds (particularly bonds requiring employees to work for a minimum time period) are addressed more towards freshers rather than laterals.
If one compares the average age of the employees in big IT companies in India, it is most likely that SATYAM’s is one of the lowest. The work done by an individual with 4-5 years of experience in other firms is done by fresher with1.5 – 2 years experience in SATYAM. This is the strategy deliberately chosen by the company, whereby the expenses on salary are reduced by getting same work done at less cost. It has its own drawbacks in that sometimes the company loses projects to its competitors due to inferior quality of services. Controlling the attrition rate is critical in implementing this business model and there is no better tool for this than employment bond.
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