HUMAN RESOURCES - Era Of Knowledge Workers

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.

‘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.

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.

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.

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.

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.

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.

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.