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TeamLease Employment Outlook Survey - Report Preview

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A quarterly publication gauging hiring sentiment amongst businesses across India. This is a preview. The report will be released in the forthcoming issue of Business Today

A quarterly publication gauging hiring sentiment amongst businesses across India. This is a preview. The report will be released in the forthcoming issue of Business Today

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  • 1. inTouch analytics http://be-in-touch.com TeamLease Employment Outlook Report Quarter-17, January-March 2011
  • 2. Contents 1. Preface 2. Executive Summary 3. Project Objectives 4. Index definitions 4.1. Employment Outlook Index 4.2. Employment Trend Index 4.3. Business Outlook Index 4.4. Business Confidence Index 5. Employment Outlook 5.1. Net Employment Outlook 5.2. Net Employment Outlook Growth – by sector 5.3. Net Employment Outlook Growth – by city 6. Business Outlook 6.1. Net Business Outlook 6.2. Net Business Outlook Growth – by sector 6.3. Net Business Outlook Growth – by city 7. Hiring Intent 7.1. Hiring Intent by Location 7.2. Hiring Intent by Hierarchy 7.3. Hiring Intent by Functional Area 8. Other Trends 8.1. Employment Outlook Index – city-sector drilldown 8.2. Business Outlook Index – city-sector drilldown 8.3. Attrition trends by sector 8.4. Attrition trends by city 9. Insights 9.1. Hiring Sentiment: a model 9.2. City trends: benchmarking current sentiment against the past 10. Annexure 10.1. Research Methodology 10.2. Sample Design & Data Collection 10.3. Reasons for Attrition – the employer perspective http://be-in-touch.com
  • 3. 1. Preface The quarterly TeamLease Employment Outlook Report provides human resource policy and decision makers a forward looking tool that tracks hiring sentiments in the market. The report carries an insight into what businesses of various sizes – across the country and across industry sectors – have on their talent acquisition anvil for the immediate next three months. The Employment Outlook Survey is carried out, and the analysis done, in the preceding quarter. The current issue of the Employment Outlook Report carries an Insights section which illustrates relationships between business growth perceptions at city and industry levels, manpower availability / shortage, attrition and hiring sentiment. This exercise is the first step in modeling the drivers of employment and arriving at a clearer understanding of the mechanics of prospective behaviour in the employment market. The section also carries a city- and sector-wise benchmarking of current quarter index vis-a-vis key statistical measures of the past 10 quarters. The Employment Outlook Survey spans eight industry sectors and eight cities across India. The survey covers small, medium and large companies across these sectors, studies attrition and employment trends, and gleans information on hiring sentiments, all this covering different locations, hierarchical levels and functional areas. With the most critical drivers that influence hiring being tracked quarter on quarter, the Employment Outlook Report is the only one of its kind seeking to deliver high impact hiring decision support to its stakeholders – Business & HR heads, Senior Management as well as industry policy makers. http://be-in-touch.com
  • 4. 2. Executive Summary • Incremental growth in indexes marks the Jan–Mar 2011 quarter outlook. The Net Employment Outlook Index increases by a single percentage point and the Business Outlook Index increases by two percentage points. Across cities and sectors while business sentiment improves – and in some cases quite dramatically, employers remain cautious about hiring as they did in the previous quarter. • Sectors show fairly high variations in both Employment and Business Outlook. The Net Employment Outlook Index grows by 8% for IT and ITeS, each, and decreases by 8% for Manufacturing & Engineering. IT and ITeS also see increases in Net Business Outlook Index of 10% and 6% respectively. Manufacturing sees a 5% dip in its Net Business Outlook Index. • The changes are subdued when it comes to cities. Except for a 6% dip in sentiment for Hyderabad and a 5% increase for Kolkata, the Net Employment Outlook Index does not vary substantially across cities. Mumbai with 5% and Chennai with 7% are the only increases in Net Business Outlook Index sliced by cities. • Trends in Hierarchical hiring intent are highlighted by strong growth at Entry levels (6%) and a modest 3% growth at Junior levels. The intent is uniformly spread across all hierarchical levels – mid- and senior-level hiring intent grow as well, at 2% apiece. Add to this, a 4% reduction in those not wanting to hire and there is something for everybody in the talent market. • Tier-II cities push harder this quarter and more employers are looking to hire from the lesser labour market. There is a 2% increase in the intent to hire from tier-II cities. Metros hold on to their domination and add a single percent point to the hiring intent while rural areas are in a limbo – the intent goes back to 1% for the least conspicuous geography. • The Blue Collar function, a largely below-the-radar area, accelerates hiring intent by a laudable 6% – the fast clip displayed by this category could also be attributed to the fact that it is being tracked only for the last two quarters. The ‘others’ category also sees good traction, growing by 4% and implying that the functional area structure would soon include a lot more categories. The above trends for hiring intent captured by functional area clouds a very modest 4% increase in intent for I.T. • The inclination to hire is influenced better by positive prospects than by negative constraints. That perception of growth for the city and for the industry are better drivers of hiring sentiment than a general evaluation of a lack of manpower and / or attrition is evidenced by a hiring sentiment model introduced in this issue of the Employment Outlook Report. http://be-in-touch.com
  • 5. 3. Project Objectives The Employment Outlook Report aims at – • Providing forward looking estimates of hiring sentiment and thus enabling its users with a tool to make effective hiring / people decisions for the immediate next quarter. • Providing *Hiring Sentiment Intelligence* for different industry sectors, business sizes and geographies, as well as across hierarchical levels and functional areas. 4. Index Definitions • Employment Outlook Index: The Employment Outlook Index is computed as the difference in the proportion of respondents who report an increase in hiring needs and those who report a decline in hiring needs over the next three months. • Business Outlook Index: The Business Outlook Index is computed by subtracting the percentage respondents who say business in the next three months is likely to decrease from the percentage who say it will increase. http://be-in-touch.com
  • 6. 5. Employment Outlook 5.1. Net Employment Outlook 5.2. Net Employment Outlook Growth – by sector 5.3. Net Employment Outlook Growth – by city http://be-in-touch.com
  • 7. 5.1 Net Employment Outlook The January-March 2010 quarter sees a single percentage point increase in the Net Employment Index. The Net Employment Outlook Index is the difference in the proportion of respondents reporting an increase in hiring needs and those reporting a decline for the quarter in question. Quarter Period (Figures in percentage) Increase Decrease No Change Net Business Outlook 17 Jan—Mar 2011 74 5 21 +69 16 Oct—Dec 2010 72 4 24 +68 15 Jul—Sep 2010 69 5 26 +64 14 Apr—Jun 2010 62 4 35 +58 More businesses have decided to hire over the forthcoming quarter compared with the last three quarters. Sentiments have sobered on both Business and Employment Outlook. Shaded cells have significant increases (gray) /decreases (red) in Index. http://be-in-touch.com
  • 8. 5.2 Net Employment Outlook Growth – by sector Three sectors see significant changes in Net Employment Outlook. The Outlook grows by 8 percentage points for IT and ITeS and dips by 8 percentage points for Manufacturing & Engineering. Sectors (Figures in percentage) Quarter Net Increase / Decrease 17 16 15 14 IT 82 74 71 69 +08 ITES 68 60 66 62 +08 Financial Services 62 65 60 53 -03 [FS] Retail & FMCG [R&F] 70 69 61 61 +01 Infrastructure [INF] 64 63 57 36 +01 Manufacturing & 60 68 66 53 -08 Engineering [M&E] Telecom [TEL] 64 61 59 48 +03 Healthcare & 73 74 70 72 -01 Pharma [H&P] Two other sectors experience marginal changes in the Net Employment Outlook – the Outlook grows by 3 percentage points in case of Telecom and drops by 3 percentage points in case of Financial Services. http://be-in-touch.com
  • 9. http://be-in-touch.com
  • 10. 5.3 Net Employment Outlook Growth – by city Most cities have little or no change in Net Employment growth over the Jan–Mar quarter; a significant drop in hiring is expected in case of Hyderabad. Sectors (Figures in percentage) Quarter Net Increase / Decrease 17 16 15 14 Mumbai [Mum] 69 70 63 49 -01 Delhi [Del] 67 67 62 43 NC Bangalore [Blr] 83 80 82 78 +03 Kolkata [Kol] 63 58 54 63 +05 Chennai [Chn] 67 66 62 64 +01 Pune [Pun] 79 77 79 75 +02 Hyderabad [Hyd] 58 64 63 57 -06 Ahmedabad [Ahd] 73 73 68 54 NC It could be recalled that the previous issue of the Employment Outlook Survey forecast an exuberant yet stable employment market over the next few quarters. The Jan–Mar quarter shows early signs of stability with most cities exhibiting marginal growth in hiring sentiment. http://be-in-touch.com
  • 11. http://be-in-touch.com
  • 12. 7. Business Outlook 6.1. Net Business Outlook 6.2. Net Business Outlook Growth – by sector 6.3. Net Business Outlook Growth – by city http://be-in-touch.com
  • 13. 6.1 Net Business Outlook The coming quarter inches up business sentiment beyond the 12-month high reached during the previous quarter. The trend is characterized by a substantial proportion of businesses expecting business prospects to improve during Jan–Mar. Quarter Period (Figures in percentage) Increase Decrease No Change Net Business Outlook 17 Jan—Mar 2011 78 5 17 +73 16 Oct—Dec 2010 75 4 21 +71 15 Jul—Sep 2010 68 7 25 +61 14 Apr—Jun 2010 60 4 36 +56 http://be-in-touch.com
  • 14. 6.2 Net Business Outlook Growth – by sector About half the sectors experience significant growth in business sentiment and the other half lose marginal percentage points, in effect shoring up Net Business Outlook. Sectors (Figures in percentage) Quarter Net Increase / Decrease 17 16 15 14 IT 82 72 73 64 +10 ITES 69 63 66 60 +06 Financial Services 55 58 57 55 -03 [FS] Retail & FMCG [R&F] 77 67 65 55 +10 Infrastructure [INF] 59 56 46 38 +03 Manufacturing & 67 70 64 56 -03 Engineering [M&E] Telecom [TEL] 47 51 41 25 -04 Healthcare & 76 81 76 71 -05 Pharma [H&P] The three sectors that have significant sentiment growth touch respective 12-month highs. The rest of the sectors were the ones doing so over the previous quarter. http://be-in-touch.com
  • 15. http://be-in-touch.com
  • 16. 6.3 Net Business Outlook Growth – by city Mumbai and Chennai contribute almost entirely to the incremental growth in business sentiment. All other cities seem to have had consolidated the gains of the previous quarter. The loss in business sentiment is marginal in case of the five cities. Sectors (Figures in percentage) Quarter Net Increase/Decrease 17 16 15 14 Mumbai [Mum] 59 54 52 42 +05 Delhi [Del] 51 52 49 40 -01 Bangalore [Blr] 79 79 73 56 NC Kolkata [Kol] 75 77 76 78 -02 Chennai [Chn] 77 70 72 69 +07 Pune [Pun] 85 83 80 75 +02 Hyderabad [Hyd] 79 80 74 63 -01 Ahmedabad [Ahd] 76 77 77 59 -01 http://be-in-touch.com
  • 17. http://be-in-touch.com
  • 18. 9. Hiring Intent 7.1. Hiring Intent by Location 7.2. Hiring Intent by Hierarchy 7.3. Hiring Intent by Functional Area http://be-in-touch.com
  • 19. 7.1 Hiring Intent by Geography Hiring initiatives are likely to accelerate in tier-II cities, while metros and tier-III towns keep up the healthy sentiment of the previous quarter. City (Figures in percentage) Quarter Net Increase/ Decrease 17 16 15 14 Metro 89 88 86 84 +01 Tier – II Cities 22 20 19 16 +02 Tier – III Towns 9 9 7 6 NC Rural 1 2 2 1 -01 http://be-in-touch.com
  • 20. 7.2 Hiring Intent by Hierarchy Businesses intend to increase hiring across organizational levels, with significant appreciation in intent at the entry and junior levels. Entry level hiring is set to grow substantially over the Jan– Mar quarter. The proportion of businesses not intending to hire is down to the Apr–Jun 2010 levels of 12 percentage points. Level (Figures in percentage) Quarter Net Increase/ Decrease 17 16 15 14 Entry Level 47 41 32 20 +06 [No Experience] Junior Level 66 63 61 44 +03 [1 – 3 years Experience] Middle Level 43 41 46 51 +02 [3 – 7 years Experience] Senior Level 23 21 21 23 +02 [> 7 years Experience] Not Hiring 12 16 12 20 -04 http://be-in-touch.com
  • 21. http://be-in-touch.com
  • 22. 7.3 Hiring Intent by Functional Area There is an incremental improvement in hiring intent across various functional areas. Blue Collar profiles beat the incremental trend and grow 6 percentage points to 37 – ranking third across functional areas. F (Figures in percentage) Quarter Net Increase / Decrease 17 16 15 14 Sales / Marketing / 77 75 78 71 +02 Customer Service [SMC] IT 27 23 24 22 +04 Engineering [ENG] 41 39 33 32 +02 Accounts / Finance 16 16 18 17 NC [A&F] Administration / HR / 13 12 13 17 +01 Office Service [AHO] Blue Collar [BC]* 37 31 28 - +06 Other 15 11 6 27 +04 Not hiring 7 10 8 - -03 *Previously included under ‘Others’ http://be-in-touch.com
  • 23. http://be-in-touch.com
  • 24. 11. Other Trends 8.1. Employment Outlook Index – city-sector drilldown 8.2. Business Outlook Index – city-sector drilldown 8.3. Attrition trends by sector 8.4. Attrition trends by city http://be-in-touch.com
  • 25. 8.1 Employment Outlook Index – city-sector drilldown City Quarter Total Sector IT ITeS FS RMF INF M&E TEL H&P Mum 17 69 12 9 8 9 14 5 6 10 16 70 10 8 9 10 14 6 7 11 15 63 9 13 6 7 12 5 7 9 Del 17 67 11 4 10 13 6 8 9 10 16 67 10 2 13 15 4 10 8 10 15 62 8 4 10 12 3 10 8 9 Blr 17 83 14 8 3 6 17 13 15 14 16 80 12 7 3 6 16 15 14 12 15 82 12 10 2 6 17 15 15 11 Kol 17 63 5 1 16 13 4 6 3 21 16 58 3 1 15 12 4 8 2 20 15 54 2 2 13 11 3 9 3 20 Chn 17 67 10 9 12 7 10 9 10 7 16 66 12 7 10 6 9 8 11 9 15 62 10 9 11 3 9 8 12 8 http://be-in-touch.com
  • 26. Pun 17 79 17 16 4 5 20 17 4 6 16 77 17 14 5 3 21 18 3 6 15 79 16 18 3 1 22 17 3 5 Hyd 17 58 9 9 3 9 8 13 3 7 16 64 8 10 4 11 8 15 4 7 15 63 8 11 4 10 8 15 5 5 Ahd 17 73 6 2 22 7 4 15 7 22 16 73 4 2 23 5 6 17 5 24 15 68 2 3 20 3 5 14 2 25 8.2 Business Outlook Index – city-sector drilldown City Quarter Total Sector IT ITeS FS RMF INF M&E TEL H&P Mum 17 59 15 9 7 5 17 8 4 6 16 54 12 7 7 6 16 9 5 6 15 52 13 10 5 4 13 7 2 6 Del 17 51 12 4 5 15 6 6 8 10 16 52 9 2 6 15 7 7 9 10 15 49 9 2 5 15 3 6 7 9 http://be-in-touch.com
  • 27. Blr 17 79 16 8 7 5 16 10 12 11 16 79 16 7 9 2 14 13 13 12 15 73 15 8 9 2 9 11 13 10 Kol 17 75 10 4 18 8 6 16 5 22 16 77 7 5 20 6 7 17 5 23 15 76 7 5 19 6 4 16 2 22 Chn 17 77 8 18 10 5 9 14 10 14 16 70 8 19 7 5 6 11 10 16 15 72 9 21 7 5 5 10 11 15 Pun 17 85 16 23 3 4 22 16 7 8 16 83 15 20 3 2 24 16 7 9 15 80 17 22 2 2 21 15 3 7 Hyd 17 79 14 9 13 6 9 11 3 20 16 80 14 9 15 5 7 12 3 21 15 74 14 9 16 3 4 11 1 19 Ahd 17 76 6 5 22 6 2 21 2 21 16 77 4 4 22 6 2 22 3 22 15 77 5 4 21 5 2 21 2 22 http://be-in-touch.com
  • 28. 8.3 Attrition Trends – by city The gradual upward trending of attrition continues across cities as business and hiring sentiments improve. The coming quarter is likely to push up annual attrition rates for most cities – Delhi, Chennai and Hyderabad are likely to be affected more than the other cities. 8.4 Attrition Trends – by sector Most sectors report modest increases in attrition, with attrition rates for the coming quarter staying well below 11%. Infrastructure, IT and ITeS are sectors contributing most to both quarterly and annual attrition. http://be-in-touch.com
  • 29. http://be-in-touch.com
  • 30. 13. Insights 9.1. Hiring Sentiment: a model 9.2. City trends: benchmarking current sentiment against the past http://be-in-touch.com
  • 31. 9.1 Hiring Sentiment: a model The below picture is the visualization of a model that relates respondent beliefs about City and Industry growth and their evaluation of the manpower shortfall in their industry and attrition in their own business to hiring sentiment. An analysis of survey variables yielded the model [in its preliminary stage the model has an R2 of 52%]. Darker shades of Red imply strong positive hiring sentiment and lighter shades indicate strong inclination to reduce hiring Hiring sentiment is seen to be strongly influenced by beliefs about City and Industry growth. As one moves from the right (high city/industry growth perception) to the left (low city/industry growth perception) on the chart, there is a perceptible lowering of hiring sentiment. Attrition is seen to be influencing hiring sentiment to a lesser degree than growth. Bangalore and IT have a similar degree of strong positive hiring sentiment, and Hyderabad and M&E (Manufacturing & Engineering) have a strong inclination to reduce hiring. http://be-in-touch.com
  • 32. Pune lags Bangalore/IT in terms of hiring sentiment and this illustrates the weak effect of attrition on sentiment. It takes a much lower rate of attrition to bring about a marginal change in hiring sentiment. The city is a close second to Bangalore in terms of growth perceptions. A similar situation exists between Delhi-Chennai-Infrastructure-ITeS and Kolkata-Telecom- Financial Services. The former cluster has only a marginally higher inclination to hire compared with the latter, although the drop in attrition rates is significant. Mumbai and Retail & FMCG have a similar measure of positive sentiment – which closely follows that of Ahmedabad-Health & Pharmaceuticals – but the city and industry have a big difference in attrition rates. 9.2 City trends: benchmarking current sentiment against the past The following two sub-sections illustrate trends in Net Employment and Net Business Outlook over the past 10 quarters and benchmark the current scenario against – a. 10-quarter highs, b. 10-quarter lows and c. 10-quarter average index values. Box-plots have been used to compare the above three statistical measures against the current quarter index value. Here is an illustration that helps with interpretation of the box-plots: 10-quarter high Q-17 index value 10-quarter average 10-quarter low The objective here is to look at where each of these cities / sectors stands today in relation to its past and to see how much the two indexes correlate with each other. Cities / Sectors with the highest quantum of change in Net Employment / Business Outlook Index during Q-17 have been considered for this analysis. http://be-in-touch.com
  • 33. 9.2.1. Cities with the highest change in Net Employment / Net Business Outlook in Q-17 Chennai: Increase in Net Business Outlook: 7 percentage points, from 70 to 77 As seen from the plot below, Chennai is well above its 10-week average on both the indexes – employment and business. This quarter (Q-17), it has hit a 10-quarter high in as many as four sectors on employment outlook and in two sectors on business outlook. http://be-in-touch.com
  • 34. Hyderabad: Decrease in Net Employment Outlook: 6 percentage points, from 64 to 58 Hyderabad is well below average employment outlook index averages for 5 sectors and is just above average on business outlook index for most sectors. The city has seen far worse performing quarters, however – the 10-quarter lows for almost all sectors have hit very low single digits for the employment outlook index. http://be-in-touch.com
  • 35. Kolkata: Increase in Net Employment Outlook: 5 percentage points, from 58 to 63 10-quarter highs in two sectors and near-10-quarter highs in two more sectors on employment outlook makes up for the huge dip in one for Kolkata. The Business outlook trends are very similar to those above. http://be-in-touch.com
  • 36. Mumbai: Increase in Net Business Outlook: 5 percentage points, from 54 to 59 Mumbai’s two indexes are quite out-of-sync with each other. Above average business outlook index values in Q-17 for 5 ciies compensates for index value dips in the rest. The employment outlook index values for Q-17 are mostly above the 10-quarter average. http://be-in-touch.com
  • 37. 9.2.2. Sectors with the highest change in Net Employment / Net Business Outlook in Q-17 Healthcare & Pharmaceuticals: Decrease in Business Outlook Index – 5 points from 81 to 76 The Q-17 employment outlook index values for the sector are above the 10-quarter averages for all cities except for one – Delhi. This, and the index value for Hyderabad which is just above the low average value for the city, bring the business outlook index down for the sector. http://be-in-touch.com
  • 38. I.T.: Increase in Employment Outlook Index – 8 points from 74 to 82 and increase in Business Outlook Index – 10 points from 72 to 82 The employment and business outlook indexes are well in sync for most cities in case of I.T. In general, the employment outlook slightly lags behind business outlook across cities. So, while as many as 5 cities hit 10-quarter highs for business outlook for the sector, the corresponding employment outlook indices for the respective cities also rise well above average (and hit 10- quarter highs in two cases). http://be-in-touch.com
  • 39. Manufacturing & Engineering: Decrease in Employment Outlook Index from 68 to 60 Below 10-quarter average index values in Delhi and Kolkata (where the 10-quarter index value variance is high), and barely above average index values in Chennai, Mumbai and Pune, pull down the employment outlook index value for Manufacturing & Engineering. - http://be-in-touch.com
  • 40. Retail & FMCG: Increase in Business Outlook Index – 10 points from 67 to 77 The low Q-17 business outlook index values are at or above average in case of most cities for the sector. This helps the city survive the huge dips in Bangalore and Pune – two cities where the 10-quarter variances are very high and, therefore, averages very low. - http://be-in-touch.com
  • 41. - 9. Annexure Research Methodology The Employment Outlook Survey follows a rigorous and statistically validated process as detailed below. Sample Design & Data Collection Random sampling technique was used to identify respondents for the survey. Data sources used to collect contact data were: 1. Kompass directory for small, medium and large sized companies in the private sector. To ensure continuity with the baseline measurement, the core random sample was drawn from this database. 2. NASSCOM database for IT companies 3. Companies registered with bpo.india.org in the case of ITES and 4. Financial companies registered with the Bombay Stock Exchange (BSE). Respondent Selection Target respondents for the study were Business & HR Heads as well as Senior Managers with hiring mandates. The databases offered a contact name for each company listed. Interviewers called into each of these companies and obtained the names of the appropriate individuals who were responsible for hiring decisions. Data Collection The survey instrument was then administered to the target respondents using the CATI (Computer Aided Telephonic Interview) methodology. Appropriate computer software was used for data collection and tabulation. Please refer the following section named ‘Sample Distribution’ for details on city and business size-wise breakup of the sample. http://be-in-touch.com
  • 42. Sample Distribution City-wise breakup Sectors / City Mumbai Delhi Bangalore Kolkata Chennai Pune Hyderabad Ahmedabad Total Manufacturing & Engineering [M&E] 9 10 10 9 11 10 10 9 78 Retail & FMCG [R&F] 21 12 12 10 11 10 9 8 93 Financial Services [FS] 13 10 11 10 10 10 11 10 85 IT 10 10 12 10 10 10 9 9 80 ITeS 8 12 12 5 10 12 10 9 78 Infrastructure [INF] 10 12 10 5 8 10 10 8 73 Telecom [TEL] 10 10 12 8 8 10 8 5 71 Healthcare & Pharma [H&P] 11 8 8 5 10 8 6 6 62 Total 92 84 87 62 78 80 73 64 620 Business Size Breakup Small Medium Large [Up to 249 employees] [250 – 999 employees] [1,000 or more employees] Mumbai 22 58 12 Delhi 15 55 14 Bangalore 25 46 16 Kolkata 15 41 6 Chennai 16 44 18 Pune 15 51 14 Hyderabad 15 47 11 Ahmedabad 20 34 10 http://be-in-touch.com
  • 43. 10.3. Reasons for Attrition – the employer perspective By City By Sector http://be-in-touch.com
  • 44. Know more, Follow us and Like us: http://twitter.com/be_in_touch http://facebook.com/intouchanalytics http://linkedin.com/companies/305009 http://be-in-touch.com