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Binding employees is not healthy
By siliconindia
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Monday, 11 June 2007, 19:30 IST
Chennai: Making employees sign bonds is not quite a measure to contain attrition, Kiran Karnik, President, Nasscom told BusinessLine.
Commenting on Infosys Technologies asking its employees to sign a `non-compete bond', Karnik said he did not want to comment specifically on the company, but said that some large IT companies had managed to maintain attrition levels lower than the industry average without making employees sign bonds or other binding conditions.
"Forcing or using other coercive methods to bind employees is not the right way to go (to prevent attrition)," he said.
Infosys recently introduced a non-compete bond for all employees. According to the bond, an employee will have to wait for six months after quitting Infosys, before he joins a `competitor', who shares a common client with Infosys, especially if the employee in question had serviced the client in the last 12 months before quitting.
This also applies to employees quitting to join a client. The bond indicated Tata Consultancy Services, Accenture, IBM Global Services, Cognizant Technology Services and Wipro Ltd as `competitors'.
Karnik said that he had not read the Infosys' document, but "any company that had such a clause would lose out on some bright employees, as bonds are generally seen as restricting individual growth".
It is common knowledge that most employees leave one IT organisation only to join another, often a competitor. Such a clause/ bond if implemented industry-wide is likely to restrict even healthy attrition levels necessary to maintain competition. "I do not see other companies taking to it (implementing the clause) as attrition of 10-12 per cent is natural and healthy for the industry," Karnik said.
S. Gopalakrishnan, President and Chief Operating Officer, Infosys Technologies, told BL, "This (clause) is nothing new. Others (competitors and clients) also have it. Some times clients insist we have such a clause. We have only formalized it (the clause) across the board."