Wednesday, October 05, 2011
Compensatory trends differ with age
Today, companies cater to several generations of employees. We discover how the conglomeration of their distinct compensatory needs can be dealt with
A study conducted by the UK based firm YouGov revealed that young workers in the 18-24 age category were most attracted to gym membership (8 per cent) and staff development/talent management programmes (5 per cent), while 25-34-year-olds were driven mainly by money, with 35 per cent being most interested in bonuses. 45 per cent of 35-44-year-olds, however, rated a positive corporate culture most highly. On the other hand, middle-aged personnel (aged 45-54) found flexible working the most appealing option (56 per cent), while over 55-year-olds were keen on receiving health insurance (20 per cent).
These mind-boggling diverse statistics helps us realise that blanket schemes will do nothing to bolster productivity. "Youngsters today are interested in tangible and real-time benefits that offer instant gratification such as retailer deals, concierge services that help them accomplish tasks sitting at their desks, movie tickets, discounts, preference with banks for loans and so on; whereas the older generation prefers wellness- and development-oriented benefits. They are also concerned about their child's education," says Rajita Singh, head HR, Broadridge Financial Solutions (India). It is thus important to have a 180-degree feedback process to produce tailor-made solutions for your diverse population, says Kavita Rao, head HR, Unisys India.
Different generations, different needs:
1) Gen Y (entered workforce in 2007): Their compensation & benefits preferences: lifestyle benefits, saving plans, educational programmes, advice on money management;
2) Gen X (entered workforce in 1993): Their compensation & benefits preferences: maternal benefits, wellness programmes, work-from -home option, life-insurance flexibility;
3) Gen Jones (entered workforce in 1981): Their compensation & benefits preferences: college savings plans, financial advice and guidance, fitness advice;
4) Early Boomers (entered workforce in 1971): Their compensation & benefits preferences: critical illness insurance, chronic condition management, cancer screening, retirement plan.
- Tanya Thomas
Monday, August 11, 2008
'HR leaders should be up to managing diverse workforces'
Business Line – 11th Aug, 2008
HR leaders need to be proficient at developing talent from across the globe and creating the infrastructure to build a high-performing workforce.
Today, HR is not only grappling with issues of attrition and retention, but also of maintaining a talent pipeline, driving high performance throughout the organisation and experimenting with new compensation practices. Hewitt’s 2007 Top Companies for Leaders research shows that ‘buying’ leaders in the open market will become increasingly risky and difficult. “Building” leaders will be the only way to succeed, says Ajay Soni, Business Leader, Talent and Organisation Consulting, Hewitt Associates, in an interview with The New Manager. Over the years, HR has become strategic to business. Could you throw some light on how HR can change the economics of the business?
Hewitt’s research on Next Generation HR has placed bold bets on areas where HR can deliver most value to business:
Human capital R&D: Next Generation HR will demonstrate a causal relationship between workforce practices and business performance. This will be done through advanced data-mining and the predictive modelling of human capital processes to identify new business insights. In other words, HR would continue its focus on human capital measurement but would shift from ‘post facto’ measures to more ‘predictive’ measures allowing management to make better strategic decisions.
Talent engine: Hewitt’s experience has shown that leading companies recognise that talent management requires a disciplined and rigorous approach in the same way that organisations manage their supply chain for products and services. To drive a continuous supply of talent, HR would not only have to look at new talent acquisition, but also at articulating future critical competencies required by the business, creating mechanisms for the assessment of internal talent on these competencies, development of internal talent, creating workforce planning frameworks and determining market pay levels.
High performance: Next generation HR will be accountable for driving performance at the organisational, team, and individual levels. We believe what’s different about today’s focus on high performance is a growing recognition that many of the traditional approaches — rewards, performance management, and development — have not succeeded in driving improved productivity for many organisations.
Rather than focusing on individual motivators, HR functions will in future begin to look at driving performance as an end-to-end process that begins with goal-setting and alignment, ensures accountability for achieving results, includes thorough and consistent feedback, and ends with differentiated and targeted rewards and developmental opportunities.
Considering that HR has a pivotal role to play now, what are its responsibilities in times of a downturn/recession?
In times of downturn, leading companies begin to focus on leveraging higher performance from their workforces. This is done by better goal alignment and higher levels of stretch in targets and more rigorous performance coaching. We have seen that at such times, leading companies start paying even more attention to retaining and developing their top talent. Hewitt feels that HR technology investments, shared services, and outsourcing accelerate at such times as does a focus on the more cost-effective processes. HR professionals should also help their organisations become more nimble in adapting to change. What they do today will position their organisations to look smart as business conditions improve, or, if they do nothing, they may be playing catch-up with their more agile competitors.
Could you comment on the HR talent in the country? Do we have people with the necessary skills for a developing economy?
The HR function has gained in salience over the past two decades. It’s been a long haul from a mere support function to an indispensable asset for most companies. Given the pace at which business is changing, there is a need for HR to enhance its capabilities. There is a shortage of HR professionals today; the function is witnessing one of the highest attrition rates in the country.
In a survey for which Hewitt interviewed more than 50 CEOs and business leaders in the Asia-Pacific region, it was found that business acumen was a basic requirement expected of an HR professional. In a globalised economy, HR leaders should be prepared to manage a global workforce. Today’s talent can be sourced from across the world. HR leaders need to be proficient at developing and promoting talent from anywhere and creating the infrastructure to build a high-performing global workforce. For HR, this will mean managing new types of relationships and adapting to a diverse population in terms of needs, business requirements, and cultural expectations.
What about compensation patterns in the country?
Organisations in India are using compensation as a strategic lever to attract, retain and motivate talent. An increasing number of organisations are plagued by attrition and retention issues. Currently, organisations are trying to retain talent by keeping a closer eye on market movements. A big part of this involves frequent reviews of employee salaries. A growing number of organisations are now benchmarking salaries against best-in-class companies, leaving behind the traditional approach of benchmarking against best-in-industry organisations.
Is variable pay an accepted concept here?
Variable pay in India is an extremely well-accepted concept in India. The Hewitt Salary Increase Survey 2008 showed that 95 per cent of the participating organisations had variable pay / pay-for-performance as a component of their compensation structure. In fact, our research shows that salary increases are also performance-linked, with the highest performer, on an average, getting an increase that is 50 to 75 per cent higher than that of a performer who is rated, ‘Meets Expectations’.
Are there any innovative practices emerging in the industry?
Some of the best employers are creating organisation structures that enhance ownership and autonomy, making young managers responsible for a high level of decision-making. Leading organisations have a sharp focus on leadership development. This includes developing the top team and a leadership pipeline for the future.
They have high-potential / accelerated development programmes that offer superior development opportunities, cross-functional roles, action learning projects, accelerated vertical movement in addition to higher fixed pay and variable pay. Long-term incentives are emerging as an important retention and motivational tool for the senior and top management levels.
We find that every year, the best employer comes from the industry that is booming during the period. Does this mean that good employers only come from profitable sectors?
The Best Employers show an alignment between their people processes and business goals. The very nature of this alignment leads to engaged employees and a high level of business goal achievement.
Hewitt has seen that the Best Employers beat the rest on total shareholder returns significantly, irrespective of whether the industry is on an upswing or a downturn. The winners of the Hewitt Best Employer Study-2007 were from diverse industries: manufacturing, services, banking, IT, pharma, FMCG and retail.
Some best practices that make a company ‘best employer’ today?
This is the sixth year of the Hewitt Best Employers study in India. These studies have shown that there are clear differences between the human capital management practices followed at The Best vis-a-vis The Rest.
The best organisations have a clear focus on ensuring high-performance cultures and workplaces, supported by strong performance management and a high degree of linkage to career opportunities. For the best employers, performance assessment is an effective tool and senior leaders are not hesitant to use it. It serves the purpose of supporting the business strategy.
The board and leaders of the best are significantly more engaged in and take ownership of talent and leadership issues. They focus on performance and competency assessment as a means to segment future potential and top talent.
Best employers build processes and practices that allow experiential learning opportunities for talent and high-potentials. They also ensure a pay-for-performance culture in their organisations and use variable compensation to motivate employees.
The ‘Best Employers’ understand the employee value preposition/ employer brand. Employees join the organisation for this promise and the organisation strives to give its employees the promised experience through its structure, processes and systems. A laser sharp focus on effective implementation of HR programmes, to be able to deliver on the employer brand.
Saturday, November 24, 2007
Employer branding helps build trust and reliability
Similarly, considering the fact that most job changes are attributed to organisational incompatibility, there must be a key factor that makes one feel 'this is a great place to work', and will ensure that the right talent stay engaged with the organisation.
The same factor will also induce such talent outside the organisation to leave their current engagements and readily accept a job offer it sends out. This 'key factor' was the crux of the discussions at the Executive Recruiters Association's convention today, themed 'Employer Branding'.
Employer branding is interlinked with product branding. "A good employer brand makes it easy to attract good talent, and once you attract good talent, that will in turn ensure good product brand and enhance the product quality further," said Mr R.U. Srinivas, Chief Operating Officer, Caliber Point Business Solutions Ltd.
While delivering his inaugural address, he further stated that generally, as a good product brand is held with its sales and acceptance in the market, an employer brand is held with the HR and its staffing function. The recruitment community is the extension of the staffing function.
Job profileTo enhance the value of the employer brand, the recruiting community has to profile the job well in the first place. The profiling includes the employer culture, environment, co-workers quality, technology level and work-life balance. Once this is done, the recruiter must find out what are the values that the candidate expects or what is the value proposition in it for the employee.
One must find out what employees look for. Whether it's a career path, learning, opportunities, challenges or just peer envy. And, finally position the job offer on various parameters – benefits, skill sets, location and competition. "As long as an organisation sends a clear message that makes one feel that 'this is the best job I can possibly be my best at' it can retain the talent," Mr Srinivas pointed out.
Mr B. Ravishankar, Global Head, HCL Technologies Ltd, in his keynote address, said the key elements of an employer brand are Personality – who you are as an employer, what you stand for and your values; and promise – Your unique employment proposition to the target audience.
Earlier, welcoming the gathering Mr M.R. Shantaram, Vice-Chairman, Executive Recruiters Association, said the convention's aim is to highlight the retention of employees through branding of organisations. The executive recruitment industry in India is now worth over Rs 9,000 crore and the association aims to raise the levels of professionalism, ethics and integrity of the recruiting industry, he pointed out.
Our Bureau
Chennai, Nov. 23 At the mention of a brand name, one instantly conjures up a product or service it offers. For him or her, the brand stands for trust and reliability.
Similarly, considering the fact that most job changes are attributed to organisational incompatibility, there must be a key factor that makes one feel 'this is a great place to work', and will ensure that the right talent stay engaged with the organisation.
The same factor will also induce such talent outside the organisation to leave their current engagements and readily accept a job offer it sends out. This 'key factor' was the crux of the discussions at the Executive Recruiters Association's convention today, themed 'Employer Branding'.
Employer branding is interlinked with product branding. "A good employer brand makes it easy to attract good talent, and once you attract good talent, that will in turn ensure good product brand and enhance the product quality further," said Mr R.U. Srinivas, Chief Operating Officer, Caliber Point Business Solutions Ltd.
While delivering his inaugural address, he further stated that generally, as a good product brand is held with its sales and acceptance in the market, an employer brand is held with the HR and its staffing function. The recruitment community is the extension of the staffing function.
Job profileTo enhance the value of the employer brand, the recruiting community has to profile the job well in the first place. The profiling includes the employer culture, environment, co-workers quality, technology level and work-life balance. Once this is done, the recruiter must find out what are the values that the candidate expects or what is the value proposition in it for the employee.
One must find out what employees look for. Whether it's a career path, learning, opportunities, challenges or just peer envy. And, finally position the job offer on various parameters – benefits, skill sets, location and competition. "As long as an organisation sends a clear message that makes one feel that 'this is the best job I can possibly be my best at' it can retain the talent," Mr Srinivas pointed out.
Mr B. Ravishankar, Global Head, HCL Technologies Ltd, in his keynote address, said the key elements of an employer brand are Personality – who you are as an employer, what you stand for and your values; and promise – Your unique employment proposition to the target audience.
Earlier, welcoming the gathering Mr M.R. Shantaram, Vice-Chairman, Executive Recruiters Association, said the convention's aim is to highlight the retention of employees through branding of organisations. The executive recruitment industry in India is now worth over Rs 9,000 crore and the association aims to raise the levels of professionalism, ethics and integrity of the recruiting industry, he pointed out.
Friday, July 27, 2007
Human resource re-engineering
The Hindu Business Line - 9th July 2007
This refers to the article “Changing HR paradigm in banks” (Business Line, July 3) on the need for an HR re-engineering process for public sector banks.
It is a timely prescription for potential human resources to be identified and an active plan drawn up to develop and mould them to take the organisation forward over the next decade.
The basic strengths and resources of the banking industry, especially those of the much-maligned public sector banks, are such that the sector can, in course of time, equal the best in the world.
In this context, a renewed emphasis on human resource development and advance career planning of its young executives is an urgent need, highlighted in the above article.
The Government’s policies are towards granting more autonomy, gradual professionalisation of company and bank boards and strengthening the top management.
Recently, it has sanctioned the post of an additional Executive Director for big public sector banks.
This policy will offer, in a small way, more opportunities for the deserving senior executives.
What, however, causes concern are the media reports of the lack of proper delineation of functions of the top hierarchy and one treading on the toes of another.
Worse, instead of taking the initiative, CMDs expect the government to list the functions of the Executive Directors.
There is, no doubt, an urgent need for re-engineering of human relations development.
Monday, June 04, 2007
Salary: How to avoid getting 'CTCed'
www.rediff.com - 4th June, 2007
'If you pay peanuts, you will get monkeys,' goes an adage. These days with a shortage of good talent in the job market, the saying doesn't really hold true. Companies are willing to offer good salaries to the right candidates.
But even after this there are things that individuals should keep in mind while negotiating their salaries. What may look like an increase in salary may not lead to a real increase.
This is primarily because these days most companies quote annual salary packages they offer to their employees in terms of what is known as 'cost to company,' or CTC.
Cost to company is a term which essentially implies the amount of expenses the company will spend on an employee in a particular year. What may be an expense for the company need not be salary for the employee.
Hence very rarely does it happen that the CTC divided by the number of months in a year, i.e. twelve, comes down to the actual monthly salary that an individual receives.
Let's look at the various ways in which companies boost the CTC packages they offer to their employees.
a) Useless allowances: These days individuals get various kinds of allowances. The reason offered is that this brings down the taxable component of the salary. Fair enough. But at times some allowances are subject to producing bills.
Let's take the case of mobile allowance that companies offer. An individual has a mobile allowance of Rs 3,000 per month. He will get that money only if he runs up a bill of Rs 3,000 during the month. Now if the individual does not really use this to the hilt, and usually gets a bill of around Rs 1,200 a month, then he faces a clear loss of Rs 1,800 in a month. This amounts to a loss of Rs 21,600 during a year.
So while negotiating the CTC packages individuals should beware that companies are not stuffing up the CTC with such allowances, which he or she may never be able to claim.
b) Food coupons: Food coupons are the rage these days with companies. The primary reason is that this helps bring down the taxable component of the salary. Food coupons, up to a maximum of Rs 60,000 in a year, are non-taxable.
But having this as a part of the salary may or may not suit everybody. If you are single and don't cook at home, then there is hardly any way that you are going to use them.
Some companies offer subsidised food to their employees. This subsidy is also at times added to the CTC salary. By doing this the subsidy does not remain a subsidy, the employee is actually paying for it.
c) Interest subsidy: This trick is a favourite with private sector banks recruiting fresh candidates. Let's see how this works.
The bank may promise a candidate a maximum loan of Rs 10 lakh (Rs 1 million) to a candidate during a year at a favourable rate of 3% per annum. The interest subsidy the candidate receives is directly added onto the CTC package.
What this means is that if an individual after joining the bank were to take a loan from the bank of Rs 10 lakh, he would pay an interest of Rs 30,000 (3% of Rs 10 lakh) in the first year. If he had taken the same loan at a market rate of, let us say, 12%, then he would have paid an interest of Rs 120,000 during the first year.
The difference between the two interests amounts to Rs 90,000 (Rs 120,000 - Rs 30,000). This is known as the interest subsidy and added to the CTC package. The issue that arises here is that an individual may not want to take the loan of Rs 10 lakh. Or he might take a part loan. And even if he does take the entire loan, with the interest subsidy being added to the CTC, he is paying a market rate of interest.
d) Variable salary: These days companies also offer a variable component in the salary subject to the candidate reaching certain set goals during the course of the year. Usually the maximum possible variable salary that an employee can get in a year is added onto the CTC.
Achieving this may or may not be possible. Currently this may not matter much because the Indian economy is doing well and individuals may be able to achieve their high targets.
e) Gratuity: At times even gratuity gets added onto the salary. Now this is a payment that an employee gets only if he quits after having spent at least five years in an organisation. Going by the rate at which individuals change jobs these days, it's been a long time since one heard anyone getting a gratuity.
f) High leave travel allowance (LTA): This is another standard trick that organisations use. The leave travel allowance usually is paid to an employee with the salary of the last month of a financial year. So this financial year's leave travel allowance will be paid along with the salary of the month of March 2008, nearly 10 months from now.
Even though an individual gets the amount in the end, he will lose interest on that amount had he chosen to invest it, if he got the amount month on month.
For a company this makes utmost sense, because they don't have make a payment month on month and can earn an income from investing that amount.
WYSIWYG (pronounced Wizwig) is an acronym commonly associated with computers and stands for 'What you see is what you get.' Now that is certainly not true of CTC salaries.
The simplest way for individuals while negotiating salaries is to clearly ask what the take home salary at the end of the month is going to be.
Wednesday, May 30, 2007
Staffing firms make head-hunting easier
| Business Standard - 30th May, 2007 OUTSOURCING: For corporates that are finding it difficult to find the right talent, HR sourcing firms may be just the answer. |
| For start-ups, getting all resources in place in the right quantity and of the right type can be a seemingly insurmountable challenge, as can finding the right manpower. |
| This is also true of firms that may have secured projects for which they may not have the personnel with the required domain knowledge. How would they go about finding people in the shortest while and at minimal cost, at the same time ensuring that they are not left with personnel who may not be required once the project is through? |
| Earlier, when firms bid for projects, they ensured that they had the people with expertise in the domain the project covered. But a firm cannot afford to have specialists from all domains on its rolls. Once a project is through, the firm may not have got another project requiring specialists with the same domain knowledge. |
| This is where IT HR search and staffing firms, with personnel having knowledge in practically all domains, play useful roles. |
| Says Madhusudan N, a team leader in Perot Systems: "When we want people with four or five skill-sets we secure them through IT staffing firms. It is one of the methods of sourcing. Though sourcing firms may not find us just the right people, we manage to get people who meet most of our needs and in many of the domains." |
| Perot Systems has engaged the services of Focus Infotech, an IT consultancy services and career management organisation, for about nine months to secure people with the required skill-sets. |
| Focus Infotech's placement offering is only meant for middle and senior-level IT professionals in select functional and technical domains like ERP, CRM, EAI, Web Technologies, Open Systems and Mainframes. |
| Finding resources through a HR sourcing firm is cost-effective. Focus HR, for instance, is a HR IT outsourcing firm, which provides manpower. |
| It supplies people with the right kind of domain expertise required to meet a firm's needs, or for the firm to meet its commitments. Focus calls itself a 'career manager' in addition to being a manpower provider. Until now, 8,000 people have passed through Focus. |
| Another such firm is Hyderabad-based TMI Network, which once recruited a multinational BPO's first 1,200 employees in great secrecy. |
| TMI has worked with BPOs, SMEs that are professionalizing and organizations that want to diversify into new businesses, according to the managing director, T. Sreedhar. |
| Mahesh Guru, a manager at iGate, finds such sourcing firms a good way through which to find people for short periods and save time and resources expended by the firm on recruitment and training. The firm does its hiring on the basis of projections, says Guru. It defines specifics to the sourcing firm, without diluting resource requirements, he adds. |
Stress control now a KRA for companies
| Business Standard - 30th May, 2007 EXECUTIVE HEALTH: Firms are now thinking out of the box to manage employee stress, lest it begins to hurt performance. |
| At Bausch & Lomb, managing employee stress is all about setting achievable sales targets and following a comprehensive annual KRA or goal setting exercise and twice-a-year performance appraisals. This ensures that there are no residual feelings leading to stress. |
| Says Uttam Ghosh, HR head at Bausch & Lomb: "Positive stress is an inevitable part of a challenging work scenario and it helps individuals to beat their limits of excellence. But we also take cognizance of the fact that there could be situations leading to negative stress." |
| Companies have started recognising stress at the workplace as a significant business concern and have been bringing proactive measures to provide a healthy environment. Kanoria Chemicals and Industries (KCI), for instance, believes in improving the time management skills of its staff to help them achieve work-life balance. |
| Elaborates Ghosh: "Critical activities, such as goal setting, target deployment communications, incentive clarity and performance feedback, if not done properly would lead to high stress levels. This could further be potential reason for quitting the organisation." |
| Mitigating negative stress is what companies focus on in their stress management programmes. Some follow Art of Living courses, others are enrolling employees in Yoga and health workshops. Some like Aricent Technologies have put de-stressing tips on their intranets. |
| Gauri Arora, a spokesperson for Aricent, explains, "Corporate communications along with the HR team organises monthly health and wellbeing lectures for employees." |
| The company even has a full-time physiotherapist on its rolls to take regular workshops in Aricent’s three centres - Gurgaon, Bangalore and Chennai. |
| At Emami stress management is rooted in the HR mission and objective. Elaborates Ratna Sinha, HR head at the group: "The principle of spiritual discourse is part of the work life with us." |
| The group has spiritual discourses by well known spiritual leaders and through reputed organisations like Brahma Kumaris and Art of Living, yoga sessions at offsites and regular exercises at the office gym. "We even encourage employees to avail themselves of their annual leave." |
| At many companies, Art of Living is the preferred medium for stress busting. Aricent has been conducting these courses since 2001, and says that though it has made the course voluntary in the last two years, there has been no drop in participation. KCI follows the stress management programme not only ensure employee satisfaction but also reduce the probability of attrition. |
| At Infogain, stress management training comprises yoga classes, dance classes, aerobics and fun zones, which are short breaks from hectic schedules. |
| The thrice-a-week classes are held by experts and a panel of physicians is available for consultation in the office. Companies maintain that stress indicator awareness and knowledge of appropriate stress management techniques make a huge difference in the productivity of the employees. |
| Says Shantanu Banerjee, head of HR at Xansa Technologies: "We realized that if the employees' stress level is too high, their work may become impaired, and the hostility they posses would get reflected in the quality of their service. In such a scenario, employees who suffer the burden of having to perform can simply 'crack'. They may actually develop ailments like heart problems, high blood pressure and peptic ulcers. Therefore, we felt the need to incorporate certain tools as part of our HR programme to control and manage employee stress." |
| Xansa has an all-encompassing stress management programme that includes motivational talk sessions, pranic healing sessions, yoga classes, recreational activities like table tennis, carrom and chess, social get-togethers such as choreography, fashion shows, collage competitions and painting competitions and no 'graveyard' shifts. Day care centres and games on the intranet also help in beating stress. |
| Adds Banerjee: "To gauge the effectiveness of such de-stressing sessions, we use employee satisfaction surveys ." He says Xansa has seen a growth in employee satisfaction levels. |
| "Such de-stressing programmes have helped the organisation to find out the kinds of problems or issues being faced by employees at the workplace." |
Thursday, May 24, 2007
IT-BPO firms beat wage inflation blues
| Despite rising salaries, the country can sustain the cost advantage for another 10-15 years. |
| The domestic IT-BPO firms have devised many strategies to counter the 12-15 per cent annual rise in wages. |
| Apart from hiring freshers and students with non-engineering backgrounds, they are moving to tier-II and tier-III cities, increasing billing and employee utilisation rates, besides improving the business mix to increase productivity to beat the heat of the rising salaries. |
| In fact, analysts and industry players say that with these strategies, coupled with an indexed wage differential, the IT-BPO firms should be able to retain their competitive edge in outsourcing for at least another 10-15 years. |
| Wages comprise around 70-75 per cent of the total expenses of an outsourcing firm. |
| Wages are increasing not only in India, but across all the low-cost offshore markets, including Romania, Poland, China, Vietnam and the Philippines. At a macroeconomic level, despite a higher wage inflation in low-cost nations, the indexed wage differential would still be considerably lower due to the low-base wages in such countries. |
| “Although there is an increase in wages at around 15-20 per cent a year, it is unlikely to sustain the same rate for more than 3-4 years. Even if the hike continues, India still has the cost advantage for 15 years over the US and the UK (our largest markets), where wages are increasing at the rate of 4 per cent,” asserts Pradeep Udhas, global partner-in-charge, sourcing advisory, KPMG. |
| “The wage inflation in the country is mostly seen at the middle- and the higher-levels and not at the entry level (fresh graduates). It is these graduates that form the bulk of the engine for IT and BPO work and hence the final impact on firms is much lesser than the oft-quoted 15 per cent number. It will be at least 10 years before India loses its cost advantage,” corroborates Siddharth A Pai, partner, TPI. He adds: “There will continue to be margin pressures, but that is in the nature of this business.” |
| V Balakrishnan, CFO, Infosys Technologies, notes the offshore wage increase is not a new phenomenon but has been happening for quite sometime now. “The competitive position of countries such as India will remain for many more years. Most large IT players are improving their business mix by becoming end-to-end players and also using a lot of tools to improve productivity.” |
| Though most industry players agreed to this line of thinking, they cautioned the Indian firms against getting complacent. “If we are not able to offset the rising wage inflation through productivity gains and evaluate smarter ways of addressing the issue, the impact will be significant,” says Prateek Kumar, executive vice-president, HR, Wipro. |
| Companies can look to make larger use of fresher talent and hire alternative talent pool from non-engineering backgrounds, including talent from smaller cities. It’s already happening. For FY07, Tata Consultancy Services (TCS) did around 30 per cent of the campus hiring from tier-I cities, while close to 15-20 per cent from tier-II and the rest from tier-III cities. Satyam also plans to recruit close to 15,000 employees this financial year with over 45 per cent of them being entry-level employees. Tech Mahindra is planning to recruit nearly 90 per cent of its new additions (around 10,000) from the fresher levels. |
| Achutan Nair, vice-president (resourcing), Wipro, says the company is planning to recruit about 7,000 non-engineering graduates in the ongoing financial year. The company, which targeted to add about 20,000 personnel in the current financial year, says just 5 per cent of the new additions will be people with 10 years of experience. |
| Moving to smaller cities also reduces infrastructure cost. “Infosys, however, feels that moving to smaller cities is not the answer to negate the effect of wage inflation since we pay similar salaries to all our employees across India,” said Balakrishnan. |
| “From operations perspective, service providers are industrialising few services that would reduce human intervention and thereby save cost. This is evidently seen among BPO providers too. Automation leads to resources made available for other high margin businesses,” adds S Sabyasachi, senior director, neoIT. Prateek Kumar of Wipro says: “One of the ways to address wage inflation is to use tools and technique to work smarter with lesser number of people and deliver the work in shorter period of time.” |
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