HUMAN RESOURCES: Living With the IT Meltdown

DQI Bureau
New Update

Asingle catastrophe often teaches you far more than a few good years do. The

euphoric millenium year saw a lot of backslapping, pampering and applause. But

the good times also brought in rampant instances of irresponsibility on the part

of IT employees–they carelessly flitted from company to company, often leaving

projects (and customers) in the lurch. Riding high on the boom, companies too

splurged on holding them back, with little concern about spiralling costs.

Practising good HR essentially meant frantic hiring in droves and thinking of

innovative ways to see that these employees stayed put.


Today, with the semblance of a turnaround in place, no one wants a re-run of

the shock and depression that set in with the downturn, but the bad times taught

people and companies to be cautious, pennywise, and also led to the emergence of

a responsible, more mature workforce. Though considerably watered down by the

omnipresence of ‘cost-cutting’, companies are abuzz with terms like

re-training, skill development and team building. The HR people back there have

finally stopped chasing impossible recruitment deadlines and have found the time

to practice what they wanted to–building human resources. Attrition rates

across the industry fell from 18% in 2000-2001 to 4-6% (DQ estimates) in the

year 2001-02.

Per-company recruiment fell to 128, from 315 last year
IT industry headcount rose from 525,000 to 562,356 
81% of training programs were focussed on re-skilling employees, against a much lower 68% in 2000-01
  Backhanded reward—attrition fell from 18% to 4-6%

As opportunities have begun to open up in the past few months, the attrition

rate is expected to rise between 8-10% in coming times. The total strength of

the IT industry in India grew by 7% (24% last year), with the total number of

employees rising from 525,000 in 2000-2001 to 562,356 in fiscal 2001-2002.


The average employees recruited per organization fell from 315 to 128. In the

domestic industry, the average fell from 135 to 37, while among software

exporters, it fell from an impressive 540 in the last fiscal to 218. But even

during a bad year, there were companies that recruited in large numbers. Among

the domestic companies, NIIT recruited 654 professionals and Accel ICIM 338 last

year. Among software exporters, TCS’ strength grew by 4,544 during the fiscal,

Infosys brought in 1,548 new employees, Patni 1,242, Moser Baer 1,050 and HCL

Tech 1,029. If such recruitment is not good news during a slowdown year, what


Lessons from the workplace

Year 2000-01 had ushered in a mad scramble for IT courses. High-powered

crash courses resulted in whiz-kids flashing fancy jobs as Web designers and

Java professionals, a set of skills required largely by dot-coms. By the end of

FY 2000-2001, shell-shocked youngsters had discovered that the disappearance of

the dot-coms meant a crash in their own market value. Not only was the demand

for people with Web-based skills low, professionals with a non-IT background and

short-term diplomas topped the retrenchment lists as re-skilling was difficult

in their case. Companies made it clear that computer science engineers and

graduates were far more valuable to them, given their strong understanding of

the fundamentals.


When it came

to sackings, diploma-holders were the first to go–and they

made up 53% of the staff at domestic companies


As word spread, young graduates who had thronged private training institutes

turned tail, either deferring or abandoning their plans of pursuing an IT

course. This lack of interest, or rather new breed of discerning students,

certainly scared the wits out of the IT training industry, which had made a

killing during the boom. Their key USP–of guaranteeing placements for all

their students at the end of the course–was blown away.

Along with the drop in registrations came the very realistic fear of a

squeeze in quality manpower. While the demand for knowledge workers is expected

to see a near three-fold rise–from 416,000 in 2001-2002 to 1,176,240 in

2004-05–supply is just expected to double from 428,000 to 875,000, resulting

in a shortage of 301,240 IT professionals. But this is the future. If we look

just at fiscal 2001-02, the fate of diploma-holders was bleak and job prospects

for the BCS’ (Bachelors in Computer Science), MCAs (Masters in Computer

Applications), and MCMs (Masters in Computer Management) were only marginally

better. Even for the traditional hot-shots–the IIT graduates and MBAs from

institutes of good repute–campus placements had never been this difficult.

Fewer companies visiting campuses, most slashed salary slabs, and in the worst

cases–deferred joining dates–IT pros have encountered a slew of professional

hazards even before landing their first jobs.

Entry points blocked

Meanwhile, there’s been a small but sure increase in the number of

professionals in the ‘experienced’ bracket. As companies froze recruitment,

vacancies in the lowest rung were plugged first. The diktat of ensuring maximum

return on investment (RoI) applied to human capital too. A larger set of

employees in the 0-3 years’ experience bracket does cost lower than hiring

professionals with more experience. However, it also calls for significant

investment in training and orientation in order to make the most of the freshers.

And even when it came to the painful task of retrenchment, companies in the red

were quick to defer the joining dates of students placed on campus. For these

‘letters to defer joining dates’ came with a rider–"Your date of

joining has been deferred to …(three-four months down the line). In the

interim, if you come across any other employment opportunities, you are free to

pursue them."



The number of ‘experienced’

IT professionals jumped, but that was only because there was a

clear drop in the number of freshers recruited

Unfortunately, for several students, it took the better part of the year or

longer before opportunity knocked again. The number of employees in the 0-1

years’ experience bracket fell from 20% to 19% in the domestic sector, and

from 19% to 12% among software exporters.

The drop in the number of employees in the 1-3 years’ experience bracket

was even more obvious in the domestic segment–where it fell from 36% to 19%.

The drop in the number of lower-rung professionals meant that the number of

professionals with a greater level of experience was higher than before. The

number of professionals in the 3-5 years’ experience bracket rose from 23% to

33% (domestic) and 23% to 27% (exports). The ‘five years’ experience and

above’ segment also showed a significant rise. Even during the IT boom, there

was an acute shortage of professionals with 2-3 years of experience and above.

It is still a challenge to hire an experienced IT professional with skills that

match perfectly, but the unsteadiness of the past year has ensured that

employees value stability.


Employers, at one point in time, were increasing salaries twice a year to

retain employees. There were always options, so the slightest discomfiture would

mean the employee walked away to what seemed like a better proposition. The

furious growth in the number of entry-level professionals and the predominance

of the 0-3 years’ experience bracket in the yester-years led to the maturing

of the IT workforce. Hard times do teach a tough, but quick, lesson.

The benched at school

While recruitment was frozen by several companies, most resorted to

retrenchment only after all other options had been exhausted. For those

companies that could afford it, employees on the bench were put on training

programs. The average training days per person per organization among software

exporters rose from 3.7 to 4.1 per year. However, given that few domestic

companies could afford to invest in training during difficult times, the count

dropped from 3.2 to 2.8 man-days in this segment. Skill-based training assumed

further importance, with 81% of the overall training conducted in the domestic

segment being focussed on re-skilling employees, against 68% last year. Among

software exporters too, there was a marginal increase, from 80% in fiscal

2000-01 to 83% in 2001-02.


Companies made

the most of benched employees, retraining them for future

projects–both in technical as well as domain skills


Also, while the importance of soft skills still holds, especially at a time

when clients could afford to be extremely selective about the quality of

manpower they would like to have on projects. Effective communication, team

skills, fluent English (and in the last year German, Japanese and Spanish as

well), and team skills certainly gave the old-fashioned techie a polished look.

However, few companies had the luxury of devoting sizeable resources on these

fronts. The focus was more on arming employees with new technology training and

equally important, domain knowledge, as more IT professionals stepped out of

their tech dens on projects deployed in enterprises from the banking, finance,

insurance and manufacturing verticals, among some others. The year also saw the

emergence of a new breed–the techno-functionals–technical professionals with

a sound understanding of the industry they were working in, or domain experts

with advanced technical knowledge.

One of the positive aspects of the slowdown was that it gave customers

(especially those on the enterprise side) tremendous confidence and bargaining

power. No longer would enterprises fall into the trap of making a huge

investment in hardware just because the vendor said it was important. No longer

would they accept bug-infested software and have users struggling for days with

a process they would have completed faster using the old system. Enterprises

started demanding that IT cut through the technical mumbo-jumbo and provide them

a working solution that actually suited them. Against this backdrop, training

employees in domain skills before they were deployed on a project became the

norm. TCS, for instance, puts its employees through an orientation course in

bioinformatics. At iFlex, which is focussed on banking software, all employees

are expected to hone both their banking as well as technical skills.

While re-skilling emerged as the need of the hour, event-based training (read

largescale seminars and company-wide workshops) dropped significantly. As

cutting costs became the mantra of smart companies battling the slowdown, plans

for most such extravaganzas were shelved. In fact, smaller companies in the red

simply did away with traditions like orientation programs for new employees or

even bi-annual companywide meets. Event-based training dropped from a good 12%

to 3% in domestic companies, and from 6.5% to 6% among software exporters.


The focus on people was not reflected in training programs alone, but in the

fundamental manner in which companies interacted with employees. Even during

retrenchment, trends like outplacement made a brief appearance. The concept of

outplacement has not yet matured in India yet as a lot of companies do this only

for the sake of formality–the market has not accepted this, not is it mature

enough yet for such practices. The initial reaction in many companies was that

the employee perhaps had some problem, and this was why he was being laid off,

not because of any business compulsions. Yet, a beginning had been made. The

two-way performance appraisal process followed by most IT companies is now

gradually making way for the 360-degree feedback process, in which professionals

are rated not just by superiors but by juniors and colleagues as well. The

efficacy of this process is still to be established, but IT companies have

started trying it out. The PCMM wave too has been catching up, as is the trend

of outsourcing some of the HR functions.

The introduction of HRMS (human resource management systems) and automation

of processes like calculation of leave and compensation cut down delays to a

great extent. Largely rid of its routine tasks, the year saw the emergence of HR

as a strategic tool in core business. As companies began diligently focussing on

employees, HR heads assumed a higher position in the hierarchy and received

better compensation packages–a typical case of keeping the people manager

happy, as he keeps the people happy?