HUMAN RESOURCE MANAGEMENT: A Formidable Challenge

On one hand while solution providers face the challenge of business growth,

the management of people required to drive this growth has become an equally

challenging task. From employee recruitment to retention, SIs are fast realizing

that HR management is no more a textbook concept and that it needs to be handled

as a business urgency.

Prabhakar Kini, Director of Bangalore-based Kinfotech, is a very upset man

these days. His is a Rs 10 crore-plus organization recruiting over 25 people. He

takes care of his employees as his family, offers them benefits apart from the

regular ones, conducts a range of motivational program, and incentivizes them

regularly.

Despite all this he continues to lose his people. Most of the time, the very

customers he has been diligently serving, poach upon his employees, sometimes

his competitors snatch a few people away and to make matters worse, some of his

people get lured by the BPO boom.

At the outset it might look like there's something fundamentally wrong with

the organization which is why it is not able to retain its people. However, on

probing deeper, one finds that the company has been adopting a lot of innovative

measures to keep its workforce motivated and is practically doing everything

right to create a conducive work environment.

A paradox you might say. But for people like Kinfotech and many similar small

and mid-sized solution providing organizations, this is the biggest challenge

that they face today. Human resource management is no longer a mere textbook

terminology for these companies-it has become a real-life task for them.

Something they need to take care of as a business priority. And well.

RIGMAROLES OF RECRUITMENT



It is not just manpower retention that partners have to grapple with.

Recruiting the right kind of manpower itself has become a trying task for many.

With most freshers typically aspiring for jobs in MNC firms or companies with a

reasonably good brand image, these small/mid-sized organizations appeal to them

only as a last resort.

Typically it is seen that campus recruitments are the best thing to do if an

organization wants to hire freshers. Also, it makes sense for the company to

target institutions based on their own position in the industry rather than

being over-ambitious trying to hire from the most premier institutions.

For companies looking at hiring people with experience, referral programs are

said to bring the maximum results. However, for hiring at senior levels, most

SIs today prefer promoting someone from within the organization, instead of

hiring a person from outside.

But all this works pretty well in a utopian kind of environment. There are

cases where an SI bags a project which requires him to suddenly hire a

significantly large number of people. And more often than not it is observed

that it takes well over a month or two before the actual hiring can take place.

This delays the entire project in turn putting the SI's business at stake.

"There have been occasions wherein we have lost out on a good order, just

because we couldn't get the right people on time," says C Dhananjay,

Director, Computer Factory.

While it may not have been that bad for other SIs, many do admit that it

typically takes over a month to find the right recruit. "That's why we

have a practice wherein we take more number of trainees than the actual position

that needs to get filled up. This helps us have a buffer to take care of

additional requirement that might arise," informs Ravi Verdes, Director,

Frontier Business Systems.

INVESTMENT GONE WASTE?



Investing in training and certification of employees is another painful area

for SIs. While it's a must for their business growth, there's no fool-proof

method to ensure even a minimum return on this investment. SIs report of cases

where employees have left shortly after getting trained/certified.

"We trained some of our new people, got them certified and before they

could start justifying this investment by bringing in business, they left our

company," rues Ashok Prabhu, Director, Kinfotech.

Unfortunately for many partners, the issue is not just about the cost of

training; it is also about the cost incurred on that employee till such time

that he starts to perform. But at the same time, if the partner wants to handle

certain projects and receive vendor support for the same, a minimum number of

certified personnel are a must. "It is like a necessary evil for us,"

quips a partner.

As a matter of fact, most people leaving these SI organizations belong to the

technical support/field service team and



are certified on various solutions. "They tend to join our client's
organization which in turn affects our business to an extent as its not just a

person we are losing out but also there's a depletion in the skill-set base of

our organization," says Jayessh Mehta, Director, Future Businesstech.

However, one novel idea that he uses to minimize the loss of returns is by

asking the employee to pay 50% of the training/certification cost. This,

according to Jayessh should be refundable if the employee completes a minimum

number of years in the organization.

MANPOWER ON BENCH



Once the SI organization manages to retain its staff efficiently and

generate returns on the training investment, workforce optimization emerges as

the next challenge waiting to be tackled. Its need becomes more pronounced in

organizations with larger employee bases.

Typically, most mid-sized SIs recruit people based on their project

requirements. Hence, once the project gets over, the dilemma for the employer is

to how to engage the team till the next similar project goes live.

While many SIs use this time-period to impart soft-skill trainings to the

employees, others try using the concept of job-rotation. One of the significant

trends that is emerging out of this scenario is that companies now prefer to

recruit people with techno-commercial skill-sets instead of just being good

either at technology or marketing. This helps them to utilize the employee

bandwidth more efficiently. "We also look at giving employees newer

responsibilities which keeps them charged and infuses constant motivation into

them," informs Ravi

GREAT EXPECTATIONS



Once the SI is done with the process of recruitment, training and so on, he

faces the next big task of continually meeting the ever-increasing expectations

of his employees. This especially becomes more arduous in the face of wide range

of opportunities available today.

And salary hike is just one of the facets. Given the high salary packages

that many larger companies offer, these mid-sized companies find it extremely

difficult to match the same or even give drastic hikes.

While most of the SIs report of having increased the average salaries between

15% and 25% last year, there still continues to be a wide disparity between what

they and larger IT companies or even places like call centers offer.

Call centers been another noticeable threat to solution providers. However,

many in the industry feel that this trend is likely to get reversed soon with a

sense of stagnation setting in at those working at call centers, coupled with

the difficult work timings.

IN SEARCH OF A PANACEA



Growing up the value chain, expansion of business, increased customer base,

extensive geographical coverage-while all these feature high on the 'must-haves'

list of many SIs, human resource management is an issue none can choose to

ignore. Since it's the people who drive their business, getting a sound

process in place to manage is a must.

Many have been trying various innovative methods to ensure maximum employee

satisfaction. Some have succeeded, while others need to re-assess their

strategies and improve upon the same.

Also, given the unique nature in which IT channel business works, pure

text-book solutions may also not be of great help. The HR issues need to be

handled in the same focused manner as in the case of shrinking margins, customer

acquisition, solution selling and so on. 

For this, the SI organization not just needs to have a dedicated HR team in

place, but also needs to work out a transparent and sound HR policy. Also, it

would be a very wise idea to borrow successful experiences from the peer

companies.

While all this will still not guarantee a cure to all the HR ills, it can

surely work towards simplifying the management of any organization's most

valuable asset: people.

GOLDIE

5 Major HR Concerns

l Right recruitment: With most people

preferring to work with MNC IT companies or the larger Indian IT outfits, small

or mid-sized SI organizations are faced with the arduous task of finding the

right kind of recruits. Manpower consultants and advertisements don't

necessarily bring in the desired results.

l ROI on training: While training some

employees is a must, there's no guarantee on the returns that the company

would be able to generate on this investment. Once certified, an employee's

market value goes up and cases of them moving on to greener pastures is

frequently heard of.

l Technical manpower on bench: Many

times, solution providers recruit people if some big project comes their way.

However, the real challenge arises once this project is over and the next one is

still some time away. It calls for a great amount of workforce optimization to

ensure that employees are not sitting idle.

l Prying customers, the biggest

competition: Solution partners lose most of their manpower to their own customer

organizations. With the SI's support staff typically being closer to its

customer, their tendency to jump over the fence is pretty regular.

l Disparate salary structures: Small

or mid-sized SI organizations find it really difficult to match the kind of

salary standards set by software development/MNC IT/BPO organizations. While

their skill-set requirements continue to be as high as the others (if not more),

the small margins they work on don't allow them to afford such salary

levels. 

VALUE POINT SYSTEMS A ZERO ATTRITION RATE COMPANY

With an employee base of 70, Bangalore-based Value Point Systems has

witnessed an attrition rate of nearly 0%!. Surprised? Don't be. In a business

where instances of employees jumping to lucrative jobs like call centers or MNC

IT companies are high, the company has lost just two employees in last one year.

And apparently manpower retention has rarely been a big issue for this

organization.

Value Point's Director RS Shanbhag credits this exceptional record to the

innovative HR practices that the company has in place. "The organization

has an 'Earn and Share' philosophy in place. Here, employees get some share

of company's profitability while the rest is re-invested back into the

organization," informs he.

He further shares that there are about four employees who actually draw

higher salaries than the directors themselves. "Unlike many other

organizations, where only sales or technical people are incentivized, we give

incentives to every employee, irrespective of his job function. This includes

the security personnel as well," elaborates Shanbhag.

Value Point in recent past has given high-value goods like cars to some of

its top-performing employees. It also gave a flat worth over Rs 8 lakh to its

oldest employee some time ago. However, Shanbhag avers that it's not just

incentives which hold the key to greater employee satisfaction.

Value Point also derives its HR success from the fact that by and large it

employs people with prior experience. Shanbhag reasons that experienced people

are far more stable in a job and its sensible to hire someone at a higher salary

level than recruiting large number of freshers and invest on their trainings and

certification.

Also the company claims to have an understanding with its major principal HP

that if the company invests towards certifying its employee, the certification

would hold good only as long as the employee stays on with the organization.

Such an understanding has helped Value Point invest regularly on training and

ensuring good returns on the same.

FEW THINGS THAT YOU CAN DO

l Get a clear and transparent HR

policy in place

l Make your organization more

process-driven

l Get your employee to share the cost

of certification, reimbursing it after a certain time-period

l Strike an understanding with your

competition that there will be no poaching of each other's employee without

mutual consent

l Institute lucrative awards for those

staying with the organization on a long-term basis

l Incorporate the concept of

job-rotation

l Conduct campus recruitments for

hiring freshers

l Create referral programs with

monetary benefits for referring employees