Indian software industry is mainly a service industry. Indian firms employ people and bill customers abroad for the services that are rendered. The charges are proportional to the number of employees working on that particular project as billing is done on the basis of people hours. Hence employees become a major asset for these software service industries. The growth in the revenue of the company is thus, linearly proportional to the number of people employed. While this growth is easy to obtain by doubling the size of the company when it is small (headcount 500 to 1000) it becomes difficult once the size (headcount 50000-100000).
This problem is currently faced by bulk recruiters like Wipro, Infosys, TCS. The purpose of outsourcing work to Indian companies is to harness the cheap labour, which India provided. This cost effectiveness still remains a major reason of outsourcing jobs to India.
The work force in India is popularly described as ‘relatively cheap, English speaking and skilled’. Following observations give an idea of the nature of the major asset in the software industry, the manpower.
This problem is currently faced by bulk recruiters like Wipro, Infosys, TCS. The purpose of outsourcing work to Indian companies is to harness the cheap labour, which India provided. This cost effectiveness still remains a major reason of outsourcing jobs to India.
The work force in India is popularly described as ‘relatively cheap, English speaking and skilled’. Following observations give an idea of the nature of the major asset in the software industry, the manpower.
1. Size: It can be one of the major factors, which lead to the proliferation of the IT industry. Abundance of labour makes it cheap. The number of people available to get trained is large enough that it mitigates the risk of understaffing when a crucial project comes in.
2. Skills: Most of the IT professionals available are young with an average age of 27.5 years. This makes it easy for the company to train them according to the company’s needs. People in India are found to have good programming skills owing to their relatively strong mathematical background. Also, English speaking ability helps them to score over their Chinese counterparts.
3. Educational background: The talent pool for the software industry comes form a varied background. 80% of the employees are engineers, not necessarily computer engineers, and the remaining 20% are either diploma holders from IT background or certified professionals from private training institutes. Engineering curriculum is not focused on IT industry, which makes training in an organisation necessary. Special training centers have to be set up to train these candidates. This leads to the overhead on the company’s expenses.
4. Revenue per employee: It is the amount of the revenue, which employee generates for a company. Thus for maximum profitability the revenue should be maximized and the number of the employees should be minimized.
2. Skills: Most of the IT professionals available are young with an average age of 27.5 years. This makes it easy for the company to train them according to the company’s needs. People in India are found to have good programming skills owing to their relatively strong mathematical background. Also, English speaking ability helps them to score over their Chinese counterparts.
3. Educational background: The talent pool for the software industry comes form a varied background. 80% of the employees are engineers, not necessarily computer engineers, and the remaining 20% are either diploma holders from IT background or certified professionals from private training institutes. Engineering curriculum is not focused on IT industry, which makes training in an organisation necessary. Special training centers have to be set up to train these candidates. This leads to the overhead on the company’s expenses.
4. Revenue per employee: It is the amount of the revenue, which employee generates for a company. Thus for maximum profitability the revenue should be maximized and the number of the employees should be minimized.
Some suggestion are made below following are the suggestions to improve revenur per employee.
Division of labour and time management: Dividing the workforce on the basis of Software development lifecycle (SDLC) phases rather than projects can be an effective method to manage the employees. It is suggested to train the employees for various software development phases and not only programming languages. Training in relatively neglected areas like ‘effective requirement analysis’, ‘designing’ etc can help tremendously in adding value to the company’s assets. Also the salaries of the employees can be kept varied based on the phase they are trained in. To make such a division of labour effective, time management has to be incorporated. Attempts should be made to manage the projects in such a way that overlap of same phases of different projects is minimized. Following example will illustrate this;
We first select three projects A, B and C, such that, A is in ‘requirement analysis’ phase (first phase), B is in the designing phase (middle phase) and C in the testing phase (final phase). Same set of employees will be assigned to all the projects. These will be a mix of people trained in different life cycle phases covering all the phases. So ‘requirement analysts’ will work on A, ‘Designers’ on B and ‘testers’ on C. the analysts finish the work on A, the designers working on B will take over. This will lead to optimal utilization of manpower. Another advantage is that employees are trained for a particular specialized task, which makes the process efficient. The number of ‘on bench’ employees can be thus controlled rising the revenue per employee subsequently. The challenge here is the increase in the communication overhead, as project is subjected to continuous change in the people who work on it. Good documentation and some overlap in the people of related phases will help to overcome this challenge.
Controlling attrition rate: Attrition can be defined as the reduction in a company’s customer population that happens as a result of normal turnover or because of some specific event like a good competitive offer or a failure on the part of the company.
Attrition rate in India is 25% to 30% as compared to the world average of 15%.
Whenever a project is given to an organization, it makes an estimate of the people and time, which will be required to complete the project, based on the requirement data, expert judgement and standardized cost estimation processes. When the attrition rate is high more employees have to be assigned to the project than actually required. This increases the indiscipline and unpredictability in the project. This can be elaborated with the help of following example; if a project ‘A’ requires 6 employees then due to high attrition rate 10 employees have to be put on the project. However if attrition rate is predictable and controlled the number of employees deployed on a project can be brought down to 7 or 8. Thus checking attrition will decrease the requirement of the non-productive back ups and help to maintain discipline.
High attrition rates can be attributed to the abundance of jobs. In contrast to the popular belief that job hopping occurs mainly for better monetary benefits statistics prove that people leave the jobs majorly because of dissatisfaction with their current work cultures and/or job profiles. Giving the quality of work the employees need to keep them motivated can effectively control attrition. This will also mean adding talent to the pool and increasing their worth. Effective training programs and in house projects are some of the means to add value to the employees retain them in the company and add to company’s assets.
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