When 30-year-old software engineer Swapnil Parjatiya (name changed) thought of leaving his multinational IT company after lining up jobs in other companies, he faced a challenge: the three-month-long notice period forced him to forgo multiple offers requiring him to join immediately or within 30 days of resigning.
So, Parjatiya did something not many would even consider: he went after the birds in the bush. “I decided to resign and then explore offers around the third month.” It was a risky move, but it clicked. Parjatiya ended up getting a salary bump of more than 70 percent after “offer shopping” with three companies.
While it is not clear if there are many who resign and seek out employment while serving notice, data from HR consulting company Spectrum Talent Management reveals that IT and consulting businesses have seen offer dropout rates rising 17 percent and 10 percent in 2021-22, respectively.
While layoffs in certain sectors, particularly edtech and some of its unicorns, have been rising of late, the scramble for talent continues in others. It’s still a job seeker’s market out there and the trend will continue at least till the end of the year, say experts.
“Offer shopping” happens when a candidate who has more than one job offer in hand uses it to extract more compensation and perks at other companies, in some instances even from his or her current employer.
This leads to a low offer-to-joining ratio at companies that are rejected by new hires. Sometimes, such employees simply “ghost” their new employers and don’t show up on joining day.
It’s a challenge that HR leaders across India Inc, particularly at tech companies, are struggling to tackle.
Why it’s happening
Rajiv Naithani, EVP and Chief People Officer of IT firm Infogain, cites two reasons for offer shopping: one, a limited pool of skilled candidates, which has sparked a war for talent; and two, long notice periods at some organisations, which allow candidates to continue seeking better offers until their last working day.
Naithani added that Indian companies have for long had to cope with new recruits disregarding the commitments they make while accepting offers. Many make excuses and back out at the last minute.
Apart from longer notice periods, Vidur Gupta, Director, Spectrum Talent Management, suggests that the high demand for talent and the work from home (WFH) option are contributing to the rise in offer shopping.
In the tech industry, the average offer acceptance rate by full-stack engineers, which stood at 73 percent in FY21, plunged to 53 percent in FY22 and is now at 50 percent, according to data from staffing solutions company Xpheno.
The perils of not staying engaged
Harpreet Singh Saluja, president of Pune-based labour union Nascent Information Technology Employees Senate (NITES), cites an example from Wipro to illustrate the extent of the problem. The IT major made a job offer to a candidate, setting April 28 as the joining date. This was later shifted to July 4 and eventually to September 5 this year.
“This is already prevailing in the industry and employees never rely upon a single offer now,” says Saluja, adding, “They keep on exploring offers.”
After serving her three-month notice period, Saloni Rajpal (name changed), 26, waited for another three months before joining her new employer. She says there was no communication during this time from the new employer, which made her nervous, perhaps because of reports that companies were cutting costs and withdrawing offers.
“I was not even getting assurance calls from the company. There was a lot of uncertainty,” Rajpal told Moneycontrol. Meanwhile, she continued to search for other jobs.
“The truth is, the common toolkit of salary, projects, and perks are no longer enough. companies need to also focus on human elements,” says Nidhee Pathak, MD and Head of Talent Planning at IT company Nagarro. Engagement with the candidate needs to continue even after an offer letter is issued, she added.
How companies are coping
Organisations are finding their own ways to reel new recruits in. For instance, in 2018, fintech CRED did something quite radical. It gave candidates a MacBook with their offer letter — if they didn’t want to join they could return it. Founder Kunal Shah revealed that 99 percent of those who got offer letters joined and not a single laptop was lost. “Blaming is the worst way to solve a problem,” he tweeted.
At Infogain, Naithani implemented two initiatives to address the problem. First, he created a better candidate experience, right from the first contact to continuous engagement after the offer was accepted. This helped the company improve its joining ratio by 10 percent.
Secondly, Infogain leveraged employee referrals by increasing the amounts paid for referrals. There was a good reason for this: the joining ratio for new recruits coming through employee referrals was much higher than any other channels.
Forward-looking conversations, if pursued well, can result in a 30-35 percent improvement in the offer dropout metric, says Rajesh Rai, VP, People Team and Head of HR, India, at multinational IT major GlobalLogic.
Ghost busting
Amit Kataria, CHRO of Hanu Software, feels the IT sector is the biggest casualty of the offer hunting phenomenon. But, he says, “this bubble will burst soon when the supply of talent improves and the market stabilises.”
One step Kataria took to put an end to “ghosting” was to make incoming candidates in strategic positions sign an indemnity agreement. In essence, the agreement stated that if the offer was accepted, the candidate had to join Hanu Software on a specific date, failing which he or she would have to pay damages equal to a month’s salary.
“This made non-serious candidates stay away instead of wasting our time,” says Kataria, adding that candidates were free to resign on the date of joining.
As a result, Hanu Software improved its joining-to-offer conversion ratio from 1:3 to 2.75:3 in all strategic and critical positions. However, the HR leader admitted that this move has also resulted in fewer candidates showing interest in positions. The tradeoff, he says, is worthwhile, as it saves the company a lot of effort and time.
Call for collective action
GlobalLogic’s Rai strongly believes that HR and business leaders in the IT industry should come together to build an ecosystem to check practices such as offer shopping, moonlighting and not serving notice periods.
Infogain’s Naithani concurs on the need for collective action. “The entire industry must adopt the same strategy to be successful; otherwise, it will fail,” he says.
If the industry doesn’t take a stance to curtail these unethical practices, says Rai, such behaviour will continue and everybody will lose.
“And the ‘musical chairs’ exercise of hiring candidates from each other will continue,” he concluded.
Source: Moneycontrol
