IOSR Journal of Business and Management (IOSR-JBM) e-ISSN: 2278-487X, p-ISSN: 2319-7668. Volume 20, Issue 4. Ver.III (April. 2018), PP 42-52 www.iosrjournals.org DOI: 10.9790/487X-2004034252 www.iosrjournals.org 42 | Page Effect of Talent Management Practices and Organisational Performance on Employee retention: Evidence from Indian IT Firms Ms.Tamanna Agarwal 1 1 Department of Humanities & Social Sciences 2 Jaypee University of Engineering and Technology, Guna, (M.P.) India - 473226 Abstract: Couple of years back, home-grown e-commerce player Snapdeal made a claim that India lacked talented programmers to meet their needs (Thoppil, 2015). This assertion reemphasized the importance of talented employees and their skills in the success of any organisation. Understandably, a lot of research efforts have been made in last two decades to tackle issues related to employee retention. This study examined the role of talent management practices and organisational performance on employee retention in the Indian IT sector. Based on literature review, three leading hypotheses were formed. Primary data was collected from 33 IT firms, leading to a total of 68 responses. Based on statistical analysis using SPSS 21.0, correlations between the variables were studied. Additionally, regression was also performed between the dependent and independent constructs. The results revealed that significant relationship was found between talent management and employee retention. On the other hand, organisational performance, on its own, didn’t emerge as a driving factor for employee retention. However, along with talent management practices, organisation performance was found to have significant effect on employee retention. Keywords – talent management, organisational performance, employee retention, employee engagement, productivity --------------------------------------------------------------------------------------------------------------------------------------- Date of Submission: 30-03-2018 Date of acceptance: 14-04-2018 --------------------------------------------------------------------------------------------------------------------------------------- I. Introduction Employee retention and talent management have been a critical issue for many organisations across the globe and an equal challenging situation for HR managers. According to an estimate, the cost of losing an employee range between one to 2.5 times the employee‟s salary (Florentine, 2018). With high employee turnover, enterprises always face the risk of lower productivity, decreased employee engagement, increased training costs and anundesirable reputation of employee attrition. Companies do realise the impact of employee retention on the long term growth and success of their organisations, especially in the competitive Indian IT (Information Technology) industry. Technological advances and global competition are the main drivers of changes in employment patterns leading to intense competition between employers to attract and retain talented workers (Osborn-Jones, 2001). According to Flegley (2006), competition and the lack of availability of highly talented and skilled employees make finding and retaining talented employees a major priority for organizations.Employees who stay longer with any company, they become more productive as they become more familiar with the work culture and they also inspire other employees to be more loyal, engaged and attached towards the company. As a result, a lot of companies nowadays are putting a lot of effort intalent management practices that encourage the employees take pride while working for their company. In literature, talent management is defined as process to attract, develop and retain high potential performers from outside as well as within the organization. It is actually a continuous process of external recruitment and selection and internal development and retention. This is achieved through talent acquisition.Talent acquisition is a proactive approach for long-term perspective in which high talent are recruited not for only current positions but for future positions which are not yet known but is expected to be there in future. Moreover, talent acquisition not only involves talent identification and development but also talent engagement and retention in the organization.According to Lewis and Heckman (2006, p. 139), they found three important perceptions for talent management. The first is that talent management is comprised of “a collection of typical human resource department practices...such as recruiting, selection, development and career and succession management” (Byham, 2001; Chowanec and Newstrom, 1991; Heinen and O‟Neill, 2004; Hilton, 2000; Mercer, 2005; Olsen, 2000). This concept argues that talent management is little more than traditional HRM.Lewis and Heckman‟s (2006) second conception of talent management more specifically