Wipro scraps bonds for freshers

CHENNAI/BANGALORE: Preparing for the talent war this year, IT major Wipro Technologies has scrapped the upfront payment of 75,000 towards employment bonds for new recruits.

Until last year, fresh engineering recruits at Wipro were asked to make a payment of 75,000 while signing employment contracts. But in a year when demand for software services is improving and the war for talent has reached peak levels, the company is changing policies to attract freshers.

Like most IT firms, Wipro has also been grappling with high attrition after the industry witnessed a return in demand in jobs last year following two years of lull during the economic downturn. During high-growth periods, IT companies increase hiring at the lower rung to manage costs and increase bench strength and Wipro has also talked about ramping up recruitment at the bottom of the employee pyramid.
The company plans to offer double-digit wage hikes this April to attract talent. Wipro still has a service level agreement in place for a period of 15 months, which the company feels helps in improving the quality of hires and ensures that it does not lose employees after putting in significant effort in training.

“The training and development program entails a considerable investment in terms of manpower, training hours, infrastructure and technological know-how. This investment makes it necessary for us to expect the fresher to stay with us for a period so as to obviate an adverse impact on ongoing projects.
However, for FY12, we have done away with the upfront payment and there is only a service level agreement in force,” Priti Rajora, Global Head-Talent Acquisition, Wipro Technologies said.

Company employees feel this move will result in higher productivity as it will ensure that employees are not working just because they have made a considerable payment. “If an employee pays upfront money he/she would work with a different mindset.
They will work just because they paid money to the company. Sometimes companies miss the best talent by asking for upfront money. Wipro’s move has come at the right time when HR heads are running to all corners scouting for talent,” a Wipro employee in Chennai said.

Several IT firms ask freshers to sign employment bonds that restrict job-hopping for these employees for a certain period of time. IT firms justify these barriers for the restless code-jockeys citing huge training costs. Most IT firms have a three-six month training period before assigning new recruits to live projects, following which these bonds ensure that the employees stays with the company for a while. While engineering graduates joining TCS sign a two-year service agreement, Infosys has a one-year agreement which starts from the date of completing training programme.

Most companies say that though it is true that asking freshers for a monetary commitment can dissuade them from joining a company, this also has its advantages.

“It is true that this might impact a person’s judgement when he is deciding which company to join, but it works both ways. It is good for us because we would rather only get the employees who are committed to the company in the first place,” Hari T, Chief People Officer and Chief Marketing Officer at Mahindra Satyam said.

Meanwhile, companies like Cognizant have never had a practice of making employees sign bonds and say this has worked well for them as they would rather have employees who want to stay than those who are forced to. “Cognizant does not have an employee bond or a service agreement and our employees work at their free will. Our practice of not having an employee bond comes from the belief that retention is the by-product of an organisation’s ecosystem that drives passion, motivation and commitment among employees,” said Shankar Srinivasan, Chief People Officer, Cognizant.

“Bonds do not increase motivation among employees,” he added. Employees, however, resent the fact that these companies do not have uniform practices globally and while they ask recruits in India to sign these bonds, freshers in other countries have no such bonds. “An Indian IT company while recruiting employees in the US, UK or China do not ask freshers to sign bonds. Unfortunately this theory seems to be applicable only for Indians,” an employee who has been in the IT sector for more than seven years said


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