Employee Tenure Becomes Hot Topic for Tech Companies

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Employee Tenure Becomes Hot Topic for Tech Companies

June 15, 2015

The IT industry has experienced the lowest tenure rates over the last few years, and the situation is getting worse. But it seems that tech companies don’t take this challenge seriously. Are tenure issues worth their attention, or are they just inevitable aspects of today’s IT environment?

The IT industry has always been more volatile than other domains. IT specialists tend to move to other companies and projects every few years—especially junior developers/testers and younger “freshers” just out of college. With the significantly increasing number of IT startups emerging every day, it is no wonder that IT experts try to gain exposure to new technologies and skills. Besides, every software vendor dealing with a number of customers in a variety of business areas eventually comes across the situation in which particular technologies and skills are no longer of interest to their current clients, so some specialists move to other projects or companies. This is called “organic” or “natural” employee turnover, and the figures for the IT industry worldwide vary from 20–30% for annual attrition rate and 1–4 years for tenure.

These figures may sound startling, but they are completely in line with current trends in the IT industry. According to the Society for Human Resource Management (SHRM), the average employee tenure for tech companies is around 3 years. In the UK, for example, the average tenure for employees of IT companies is a little more than 2 years. If we take a look at Fortune 500 companies, we will see that the figure at some of the great tech companies is even worse. For example, the average employee tenure at Google is only 1.1 years.

The great number of possibilities in the IT market is not the only reason for the increasing turnover rates. Many experts blame Generation Y for the decrease in job tenure. The average estimated job tenure for Gen Y is 2 years. This is a problem that most tech companies face.

The decreased tenure almost automatically means a higher employee turnover rate. The annual turnover rate averages 15% across all industries, according to the SHRM Human Capital Benchmarking database. In Russia, different surveys estimate that the average turnover rate for the central region is 18% across all industries, and it will be even higher (up to 25–40% according to different experts) in 2015 due to the unstable economic situation in the country.

Employee turnover is a rather costly issue. It includes not only the obvious financial losses (i.e., recruitment, onboarding, and training costs) but also virtually immeasurable non-financial investments in knowledge, workplace collaboration, and competitiveness. Knowing this, we always highlight the fact that workforce retention is a number-one priority for our company, and we put a lot of effort into growing our talent and keeping it in the company. Our efforts in this area have been acknowledged by the International Association of Outsourcing Professionals, which gave Auriga top marks and special honors in Corporate Social Responsibility in the latest Global Outsourcing 100 rating.

This success and the necessity to look ahead inspired Auriga to work actively on launching new initiatives and steps to improve the company’s leading positions. Andrei Pronin—SVP of Strategy, Technology, and Marketing leading the new strategic initiative, Talent Acquisition and Development—shared his opinion on the matter:

The tenure issues can become a serious challenge for a software vendor if not treated properly. But I would like to focus on the fact that these rates differ significantly across the various groups of engineers—while we at Auriga witness a certain level of turnover among junior and standard engineers, the more experienced engineers stay with us for 5 to 8 years and more. So I prefer to speak about some level of ‘healthy turnover,’ meaning rotation among ‘freshers’ and junior engineers.

It’s normal for the young talents to look for their place in the world, trying new technologies, tasks, and employers here and there. Such renewal helps us to build a balanced team structure that is capable of performing the most challenging projects for just about any customer. But as a business owner, you have to walk a tightrope, balancing the retention of mature professionals, keeping them busy and engaged, and the hiring of junior engineers, finding the needles in the haystacks, promoting them internally, and training them into new professionals. To reduce the fallout of tenure issues, you should avoid the ‘all I need are engineers’ approach and pay more attention to motivation, people management, and the communication process in your teams.

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