Why 2011 could worry you

BANGALORE, INDIA: The advancing year is promising a lot of reasons to smile for the business. The market recovery, profits bringing businesses back in action... but like every coin that has got a flip side, 2011 has got some reasons to worry about, too.

In this new year special, we asked the CXOs about the challenges that they expect to come up over the days to come. The top challenges that seemed to worry almost all of them were, talent acquisition and retention, defining a sustainable business strategy and balanced growth.

Last quarter, the attrition levels touched 15-17 per cent which was an all-time high for the entire year. Every company had just one answer to this situation, that with the economic recovery the job market is opening up and will see a lot of movements especially in the 3-7 years experience category. And going forward this could become a major concern. Companies would look at strategies to retain the talent.

This would mean more hikes and compensation and in the end more pressure on the operating margins. Alexander Varghese, country head and VP, corporate services UST Global said, “Volatility in talent is going to be a big challenge. The increasing demand in the market will largely impact the small and medium corporates. Companies would need to work on inculcating that loyalty and stickiness factor among their employees.”

The second challenge is the continued uncertainty in the demand environment. It would force companies to look forward to sustainable business strategy. Last year started seeing a transformational shift of the models, bringing in new ideas like non-liner models, outcome-based model and managed services models and would continue to be a key challenge in days to come.

The influence varies based on the verticals. Like in the IT sector, as S. D. Shibulal, COO, Infosys Technologies puts it, “Over the past year, the IT industry has done well to recover from the sluggish growth period the year before. For the year ahead, there is a sense of optimism in the short-term but there is uncertainty in the long-term due to the tail effect of the crisis and slower recovery in Europe as compared to the US.”

The players in ITES have similar concerns.

“Unlike the earlier years, outsourcing and offshoring will be adopted as strategic imperatives. Post the recovery, the new order will require even further cost efficiencies, but ironically, at higher quality and innovation. In this context, there will be a shift from the traditional FTE (full-time equivalent) model to the outcome-based model and BPO businesses must build much more domain specialism,” added Keshav R. Murugesh, group CEO, WNS Global Services.

According to Jayant Keswani, head marketing, Autodesk India & SAARC, “In the architecture, engineering and construction businesses, customers today are no longer asking for a model-based design approach but how the solutions can help them solve challenges of creating sustainable designs, meeting the growing demand.”

Lastly, as companies continue to grow, they need to look at bringing the right balance of the CAPEX and OPEX. Ideally, it has always been there, but with opening market, increasing demand and the need for innovation, managing your growth has taken a priority.

Rohit Mahajan, managing director, Saviance Technologies, said, “The new year 2011 holds a lot of promise and we are quite upbeat with our clients' requirements, but the challenge that would come forward is sharply defining the strategic focus of the business. The expectations of our IT consulting clients have now include strategic staffing and staff augmentation as well.”

Subrato Bandhu, director, Global Outsourcers and Systems Integrators, BMC Software, said, “In oder to achieve growth after the market rebound, CIOs are making efforts on lowering CAPEX. Alternatively, this is making them look at options like Cloud.”

There are many other challenges or hindrances, that could be more industry specific.

Suresh Balasubramanian, national sales director, Cisco, Consumer Products, India says, “The major issues we have faced are on two fronts; firstly the mass audiences need to be educated about the advantages of wireless gadgets. Secondly we need to increase our market penetration as there is a huge untapped market in India especially the tier I & II cities.”

If the coming year will not be as dwindling as 2010, then it definitely is not going to be a cake walk. But companies can make this year a remarkable one by just getting their strategies right with the right focus.