Whoever runs an IT offshore development site typically racks his/her brain about how to minimize employee fluctuation. It’s about productivity, securing know-how and predictability. You’ll find in the following an overview of the most important “hygiene” factors, tips & tricks to keep fluctuation as low as possible.

First, if you check out with companies that already operate IT offshore or nearshore locations, you will hear one advice very often: Developers want to work on interesting projects, developers want to work with state-of-the-art programming languages and modern frameworks, because it is about their future or their “employability”. No company should be surprised to see high persistent fluctuation in a maintenance project with the outdated programming language Delphi.

Second, it is equally obvious that developers attach importance to working for an interesting company. Is there a convincing corporate vision, is there a convincing “purpose”, how good is your employee marketing? In the age of the digital economy, good developers can choose who they want to work for; this is not only true in industrialized countries (high-wage countries), but equally so in nearshore and offshore locations.

Third, it basically follows from what was said before: Developers want to have a perspective, and this is where the best practice consists in defining a convincing career path, take the appraisals seriously, determine training measures, develop a long-term career outlook and convincingly demonstrate that employees develop valuable skills in their projects, in your company. As per my experience in many German medium-sized companies the development of employees is only done half-heartedly. It is no wonder that HR work is thus neglected also in IT nearshore and offshore locations. The Categis GmbH for example holds appraisal meetings every six months, career / training milestones are defined consistently and follow-up, progress is measured.

Fourth, employees (including ourselves) typically spend a relatively large amount of time in a company, at the workplace. Therefore, you should make sure that employees feel comfortable at their desk, in their team. Check out whether the cooperation within the team is smooth, check out whether all characters get along well with each other, invest in team building. As is well known, it is not always easy to create a good atmosphere: If communication between developers and test engineers is largely conflict-free, developers (who consider themselves quite often more of an artist than a anything else) may feel too patronized by their team leader, and so on. I have experienced employees quitting because they did not get along in the team; I have also experienced that a high level of loyalty has developed because there has been excellent team cohesion. Many years of knowledge of human nature and good observation are required; and since (German) managers of IT offshore and nearshore development centres are seldom permanently on site, it is extremely important to have a person of trust on site who takes on precisely this role of holistic team management.

Fifth, IT professionals in India, Ukraine or Romania are not “unskilled workers” or “2nd class developers” just because their wages are lower. Low wages often result from lower living costs, in India this is due to an inexhaustible supply of low-skilled workers in economic sectors such as construction, catering, domestic help, etc. It is important to convey authentic appreciation towards your IT Offshore / Nearshore teams nearshore, communication must be on equal terms.

Sixth, pay your employees well. It’s, again, a no-brainer. If you have a loyal, well-rehearsed team, you should pay wages that are (slightly) above the market. This extra investment pays off.

Seven, remain vigilant, don’t get yourself caught unprepared. Introduce a constant monitoring of satisfaction level, so that you can respond to challenging situations on time. You won’t find be able to keep employee attrition to zero (this wouldn’t be economically viable), however, in some cases you can prevent the loss of an employee. Sometimes, you’ll have to let team members move on: In a city like Bangalore the telephone lines run hot, when one of the big IT service providers has acquired a major project and looks for new developers; these IT service providers are then prepared to pay high premiums, 30 to 70% (sic!) would be quite common. It is rarely a good move to outbid these aggressive recruiters in such cases, because your salary structure will be distorted badly. However, if an ongoing conflict situation in the team ruins the mood (see above), you have to act and eliminate the (home made) risk of fluctuation.

Eight. Involve the family in the company’s activities (especially in countries such as India): Invite the whole family to anniversary celebrations, make an employee magazine (plus a quiz for the little ones) or an open day.

Nine before you start a location, be aware that first tier cities (e.g. Bangalore, Hyderabad in India) have a higher turnover rate than about 2nd or 3rd tier cities like Kochin, Ahmedabad or Madras.

Ten and finally: Prevention against fluctuation naturally begins with the selection of personnel. You should make a wise choice when hiring and avoid “job hopper” profiles.

For further reading: IT Offshoring to India: Different options, their advantages and drawbacks.


The author is a manager in the software industry with international expertise: Authorized officer at one of the large consulting firms - Responsible for setting up an IT development center at the Bangalore offshore location - Director M&A at a software company in Berlin.