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HUMAN RESOURCES - Era Of Knowledge Workers

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DQI Bureau
New Update

Small may be beautiful, but not in the IT industry. In the

knowledge era and a skill-based economy, it has become imperative that human

resources become one of the most essential ingredients of success. The growth of

IT companies worldwide depends on its people and the intellectual capital it

possesses.

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‘Knowledge workers’ has become a buzzword in today’s IT

scenario. And if we look at the top software exporters, they have been growing

phenomenally in workforce strength. To make it big in the global software

market, India needs to increase its mass of knowledge workers. The establishment

of Indian Institutes of Information Technology is definitely a step ahead in the

right direction, but what the industry needs is experts in niche areas, in other

words, persons with domain expertise. In the era of cutting-edge technologies,

it is this skilled workforce that will make all the difference.

Manpower strength

The total human resource strength of the IT industry as a

whole stands at 425,609. A company-wise break-up of this figure reveals that

nearly 525 companies constituting 35% of the IT industry employ an average of 58

persons each, 750 companies constituting 50% of the industry employ an average

of 275 persons each, and 150 companies constituting 10% of the industry employ

an average of 726 persons each. At least 40 companies have more than 1,000

employees, while some very big companies like TCS, Wipro and Infosys have staffs

above 5,000 each.

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Despite having abundant English-speaking skilled workforce,

an acute shortage of skilled workforce will affect the country’s software

exports in the long run, if remedial actions are not taken immediately.

Last fiscal, 68,000 software students reportedly passed out

of the various IT training institutes. But with 280,000 jobs expected to crop up

in the next two years, this number seems improbable to meet the demand.

Incidentally, last year, according to media reports, 73,980 software

professionals were recruited. Now, the differential in the number of

professionals who passed out of the institutes and those recruited shows that

India’s software professional strength still lags behind when it comes to

expertise in cutting-edge technologies and niche areas.

After the US relaxed norms for the H1-B visas, at least

200,000 H1-B visas were provided to software professionals from India. But then

there are nearly 364,000 high-tech jobs that are left vacant in the US. This

shows that there is a high demand for software professionals across the globe,

especially in the US. Over and above this, with Germany courting Indian IT

professionals from India have a big opportunity to make their presence felt all

over the world.

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Qualification and work experience

The pattern in qualifications shows that post-graduates,

along with engineers, constituted nearly 70% of the workforce in software export

companies, and only around 48% in domestic companies. Surprisingly, domestic

companies had a larger share of doctorates with 2.6%, while software export

companies had only 0.5%. Comparing this figure with that of the previous year

shows that the number of doctorates employed in domestic IT companies has gone

up by 1%.

As far as work experience is concerned, software export

companies employ marginally more people with



1-3 years of experience. While 39% of the total manpower strength of software
export companies are staff with 1-3 years of experience, such staff make up 35%

in domestic companies.

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Incidentally, 38% of workforce in the entire IT industry

comprises those who fall in this category. Also, domestic IT companies employ

more people with 5-10 years of experience and also people having more than 10

years of experience when compared to software exporters.

Recruitment and attrition

We looked at the human resource turnover of the IT industry

through two variables–one, recruitment arising out of growth and expansion of

an organization, and the other arising out of employees leaving the

organization, or, attrition.

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On account of growth or expansion, the last fiscal saw

software export companies recruiting on a large scale, with nearly 25% of

recruitment being a result of their growth or expansion plans. On the other

hand, domestic companies maintained the same level as during the previous year–16%

of their recruitment being due to growth. The industry as a whole, with a tilt

towards software exporters, showed 22.5% of the staff being recruited as part of

growth or expansion plans of the companies.

As far as attrition is concerned, software exporters have

been able to keep a close watch on their employees. They have managed to

maintain the same level as in the previous year, that is 10.23%. The domestic

companies, which had been combating a high attrition rate of 18% in 1998-99,

have been able to scale it down to the level of software export companies. The

rate among domestic companies fell to 10% in 1999-2000. The attrition level in

the IT industry also came down drastically to 10% in the last fiscal.

On an average, while the average number of employees

recruited by an IT company was 208, the average number of recruits for a

software export company was 334, as compared to 81 new hands joining a domestic

company, during the last fiscal. This shows that the domestic companies have

been able to achieve a higher retention by controlling the attrition rate, as

compared to the previous year. Yet, growth and expansion activities of the

software export companies led to a higher intake of staff, despite a low

attrition rate.

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Training

Growth in manpower among software exporters has also led to

an increase in the number of man-days training per organization. While software

export companies had over 7,500 man-days of training per organization, the per

person per organization average was six days, the same as in the previous year.

This is far above the figure for the previous fiscal, which was 5,500 man-days.

Domestic companies, incidentally, spent a lesser number of

man-days on training–over 750 man-days per organization–with an average of

two days per person per organization. This trend shows that while the software

export companies are constantly keeping in tune with the latest technological

advancements, the domestic companies have not been able to spend as much time as

is needed on training their staff. As a net result, on an average, the number of

man-days training per organization turns out to be more than 4,200.

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Job deployment

Looking at the trends of job deployment in the IT industry,

as is the wont with any knowledge-based industry, the highest number of manpower

has been deployed for skill-based activities. While software export companies

had deployed 32% of their workforce for project implementation, domestic

companies had deployed 24% for project development. The industry as a whole

deployed 29% for project development and 29% for project implementation.

Domestic companies who need more of marketing and sales workforce had 15% of

their workforce being deployed for this activity, while software export

companies who need less of these personnel, had around 7%. The industry average

stood at around 9%. Domestic companies had relatively more workforce on the

support side with 15%, while software export companies had around 12%. The net

result for the industry as a whole was around 13%. Around 6% of the workforce

strength in software export companies was deployed in research and development,

while only around 2% was deployed for domestic companies. Incidentally, domestic

companies had more workforce being deployed on the quality control front with

around 2%, while the software export companies had 1.5%.

Incidentally, domestic companies had more staff in the

management-related area with 27% of their workforce being deployed in this area,

while software export companies deployed only around 14%. The net figure for the

industry as a whole has been around 15%. This follows the pattern among software

export companies, which had fewer workforce deployed on the management side–a

higher figure would have affected the productivity of the companies.

What the future holds?

According to a Nasscom-McKinsey study, India should aim to

have close to 2.2 million globally competitive knowledge workers by 2008. The

report says that all employees should have the skills, expertise and the

business acumen to provide quality output in different areas.

One thing that has come to light is that most of the

companies have started taking their knowledge workers seriously enough and

analysts have started looking into a company’s human resource performance to

base their investment suggestions. Economic value add (EVA) has also become as

important as the brand value. Though some companies have not put any

quantifiable value on its knowledge workers, more and more companies are coming

out with annexes in their annual reports presenting data for some sort of

comparison of their workforces.

Still, valuation of human capital is restricted to a few companies. The

reason is obvious–unlike in the US, where IT companies are rewarded for their

human resource base, in India, only those companies that have gone for the US

generally accepted accounting principles (GAAP) or those that have sound

fundamental principles, have gone for the human capital valuation. Infosys has

set a trend in this area; it began quantifying human capital way back in 1996.

And in 2001 we may see Tata Consultancy Services doing an EVA. Definitely, it

seems better times are ahead for the knowledge workers, not to speak of the

employee stock option plans that most of the companies already have in

place.

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