The Business Impact of Attrition

Categories: Business |

everest group

Everest Group recently came out with a report looking at the business impact of attrition.  That got me thinking naturally of the business impact of attribution on software R&D.

Everest’s report estimates that for a typical US-based company, “attrition could lead to a potential loss of US $1-2 million in business value over a period of one year.”  The report looked at this loss based on two factors — the “cost” of attrition to the company and “revenue leakage due to productivity change” given attrition.  While this report specifically focused on contact centers and attrition, it is useful to think of what cost attrition has within the software R&D space as well.  It certainly has a cost whether you are doing software R&D strictly in house or partnering with a company such as Belatrix.  It’s therefore important to ensure that you keep that in mind when selecting a partner or hiring internally.

R&DIn comparing global development partners across multiple regions, companies can sometimes apply rigid cost criteria.  While not totally unexpected, it’s important to look at cost parameters from a broader context.  For example, we often hear stories of companies that go with low cost regions only to see higher cost projects in the long run.  High attrition levels is one of the reasons they cite for wanting to make a change to Belatrix.  It’s crucial therefore to look at cost in parallel with attrition.  Failure to do so can easily blindside projects.

Unmanaged attrition can have a significant effect on software release cycles.  This in turn can result in missed product upgrades or deployments.  That, in turn, can carry a heavy toll on revenues, to say nothing of missed market expectations depending on the status of the company.  It’s therefore crucial to have a software R&D partner who can manage attrition strongly to ensure a smooth and stable team.

Culture is important to managing attrition.  At Belatrix, attrition levels are low.  And that measure is something we manage aggressively.  One of the ways we do so is via cultivating a strong organizational culture.  First and foremost, we want Belatrix to be a warm, inspiring family with bright engineers who thrive on collaboration.  We think that should be the goal no matter what.  But there is also a business side to having a culture that nurtures people, creates an environment where each individual can thrive, and contribute his/her best to their work. Low attrition levels helps us meet our clients needs without cost surprises.

Training is another important factor to managing attrition.  As human beings, we’re hard wired to learn from birth.  Engineers in the software R&D space especially rely on active learning and constant challenge.  R&D is about  “you’ve got to run as fast as you can to stand still.”  R&D is about doing whatever it takes to stay ahead of the curve.  Our people therefore need to have the training to stay on top.  Investment in training not only sharpens an individuals skill base, but as our people are continuously challenged intellectually and creatively, that also contributes to low attrition.

Attribution is intricately tied to business value.  High retention levels decrease costs, increase quality, and ultimately lead to revenue goals.  A lot of IT Services and Software Development firms shy away from speaking about attrition.  Belatrix doesn’t.  It’s an important discussion item in considering whether your Software Development partner can deliver ultimately.  Belatrix enjoys a high retention level.  and it’s that focus on attrition that just makes plain business sense.

What do you think?

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