Human Resources-Time To Spruce Up

Different statistics have been proposed by various

government and semi-government agencies about the dynamics of human capital in India's IT

industry, but few have been backed by survey data. Dataquest presents a overview emerging

from the Top 20 survey of the human resources deployment in Indian IT. Since the dynamics

of the domestic and export IT industry are dramatically different we have analyzed the

data along those lines.

The Indian IT industry is brimming with intellectual

capital. While a medium-sized software development organization in the USA talks of tens

of programmers, its Indian counterpart talks of hundreds and thousands. According to our

estimates, the average employee size of an Indian software and services export

organization is 1,880. However, a western organization employing professionals on this

scale would be a industry leading behemoth.

The average size of a software exports company has grown by

25% over the year which means that we have recruitment levels at 25% in the software and

services export industry. Both profitability and average revenue have also grown between

30% and 50% but the marginal increase in productivity has not gone up much at 12 to 15

lakh per employee, or $35,000 per employee per year. They seem to be operating on

economies of scale rather than value creation. With the Y2K money drying up soon that will

separate the chaff from grain.

A closer look at human resources trends

Training



The software export companies averaged a whopping 5,500-plus days of training per
organization in an year. However, when averaged across the employees of these

organizations, it amounts to six days per person per organization, only a few days higher

than their domestic counterparts. The domestic companies averaged five training days, and

though they spent on only 1,400 training days, because of their smaller average employee

size, they have a comparable average. In terms of specific training needs, domestic

companies spent more on management and seminars and software export companies spent more

on skills development.

Qualification



Software export companies have a large number of employees qualified as
post-graduates and engineers. This population constitutes 67% in software export

organizations but only 50% in domestic companies. Domestic companies have another

comparable segment of graduates and diploma holders who constitute 42% of their total

employees. Software export companies also have more doctorates and higher qualified

employees on rolls than domestic companies.

Work Experience



Both domestic and software export companies have almost similar work experience deployment
profiles.

Recruitment and Attrition



Very often we hear, 'Our company has a lower attrition rate than the industry, we have
only 18%, they have 15% attrition, the industry has 12%...and so on.' So what's the

official figure? We look at the human resources turnover in the IT industry as the result

of two components. The first is vacancies resulting from expansion and growth and the

second through attrition. The industry combats the result of both issues at the same time.

For coping with growth, both domestic and software exporters took on 15 to 16% additional

employees in a year. In terms of attrition, the domestic industry appears to have a larger

battle at hand, combating 18% losses in a year. In comparison, the software export

organizations face only 10% attrition in a year. The net results for both are a numbing

34% for domestic companies and a lesser 27% for software export organizations. However, in

terms of sheer numbers, software export organizations recruit almost twice as many as in

the domestic organizations. An average software export organization recruits 250-plus

employees in a year, in comparison to a domestic organization's 113 employees.

Employee Strength



A safe conclusion is that there is a much higher percentage of software export
organizations in the 100 and 1,000 above employee bracket levels. Domestic companies

mostly fall into the below-100 employee bracket.

Job role deployment



There are two distinct areas of difference between the domestic and software export
companies. First, software export companies have little need for sales and marketing

employees and they constitute less than 6% of the populace. In comparison, sales and

marketing personnel for domestic companies stand at 18%. Second, software export companies

have a large number of employees called the product and project developers and they

constitute the single largest segment of employees at 48%. In comparison, domestic

companies have only 21% of developers. For the remaining types of job roles, like

implementation, support, R&D and Quality Control, employee deployment is almost the

same for domestic and software exports organizations.

Concern Areas



The average domestic IT organization appears to have downsized, with the number reducing
from 425 employees in 1997-98 to 384 employees in 1998-99. The new entrants in the DQ Top

200 are probably leaner and smarter than their older counterparts. The effective

deployment of IT applications replacing top-heavy manpower enrollments. Reflecting the

somber corporate sentiment, the average domestic IT organization has grown by only 10% in

revenue.

Also, while the productivity of domestic companies is

higher than their export counterparts, the latter is more significant because it reflects

the actual global value of the country's intellect. And the value is much too low by any

global benchmark. Indian intellect is both being under utilized and under valued.

An attempt has also been made to estimate the total human

resources employed in both the domestic and software export industries. These are based on

extrapolations from the average figures of employment and estimates of the total universe.

In the last one year the total numbers employed in the Indian IT industry (both domestic

and export) has gone up from 350,000 to 408,000. While the total number of enrollments

from private IT training institutes in 1998-99 exceeded 800,000, we estimate that the

remaining number are either absorbed by end-user organizations or migrate overseas. The

average figures presented here reflect the trends across the top 150 domestic companies

and top 50 software exporters. For extrapolation, much lower averages have been assumed

for the rest of the industry.

In future, with IT deployment increasing in Indian

enterprises, and software and services export organizations attempting to move up the

value chain, monitoring these human resource parameters will provide early evidence of the

advancement of maturity into our local environment.