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How HR can help IT cos beat slowdown

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Old 12-14-2008, 01:38 PM
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Default How HR can help IT cos beat slowdown

How HR can help IT cos beat slowdown

The whiff of a recession in the US was taking its toll on India's IT and BPO sectors, when the second whammy struck. Seismic shocks in the US financial services industry -- the biggest buyers of Indian technology services -- is taking the wind out of the IT sail and having a huge, tectonic effect on people in the business, the employee and the employer.

While techies are sulking over the end of a bull run of exorbitant salaries, fancy perks and high-consumption lifestyles, it has been a tough call for entire organisations and the HR manager especially. The focus has shifted from quick ramp-ups to managing layoffs, from generous perks to belt-tightening and to align the talent acquisition strategy to the firm's long-term business needs.

Here are some ways by which HR can help IT companies fight slowdown

Pink slips: Cut the panic

The effects of an impending recession in the US has forced Indian companies to finally, albeit reluctantly, resort to layoffs. For the first time in India, across sectors, the spectre of retrenchment looms large and IT is no exception. For a robust and young workforce used to a world of plenty, pink slips are now a cruel reality.

While actual numbers being shed in IT might be small compared to total hires, job losses create insecurity that can **** the working environment. Employee morale sags, rumour mills work overtime and for the company's HR head, communication becomes the key to keeping it together.

“Communicate as close to the real situation as possible. The more you hide, the more you lose,” says Gangapriya Chakraverti, head of information products solutions at Mercer. The medium remains the same, the message becomes different: emails/townhall meets now talk about profit fall and project closures.

Pink slips: Handle with care

Symphony Services, for one, has a training module for HR managers on how to do employee one-on-ones. Its chief people officer C Mahalingam has been trained by a leading global outplacement firm to handle difficult situations in a manner that is professional, and least painful, to the staff. Open, clear communication that moves both ways -- top-down and down-top -- effectively ****s rumours doing overtime during crises.

“Meetings with senior managers and team briefings keep everyone together and prevent employees from finding out about their future through the media,” says Alaganandan.

The catch though, is that firm’s link job-trimming to performance benchmarking. The word sacking is rarely used since people are not used to a hire and fire culture and worry about the social stigma. When media was abuzz about Satyam cutting 4,000-plus jobs, CEO Ramalinga Raju said some non-performers have been shown the door, a practice that has been going on for some time.

Hire the right talent

“The growth rates have dipped but are not negative. As per their future guidance, big IT firms still need people as the project pipleline hasn’t completely dried up. People needs will be muted but not non-existent.” says an IT analyst with Frost & Sullivan. So, what do IT firms do?

The mantra is to hire less but better. IT services firms typically ramped up as projects grew -- a linear equation. A large part of these new hires -- anywhere between 27 per cent and 35 per cent -- would be benched. With projects, or their magnitudes, becoming uncertain, efforts are being made to break this linearity.

“A slowdown is a good time to segment talent and separate wheat from the chaff. Hiring will continue, but will be thoughtful and focus on bringing on board the right fit,” says Alaganandan. Explains Chakraverti: “IT services majors are looking at current bench strength and future bench strength very carefully. They are definitely not hiring in anticipation of future projects. But at the same time, they need to hire smart.”

Says iGate's Kandula, “They are slowing down the hiring process in some cases, staggering, postponing or even ceasing campus or entry-level hires in other cases. Every company today is in a ‘wait-and-watch’ mode. Perhaps by Q2 of 2009, they will have sufficient visibility to see the direction where they are headed.”

Shave training costs

With its induction programme getting staggered, Wipro has started innovating to make sure that it has ‘business-ready’ software professionals. Pratik Kumar, corporate vice-president (HR), says the group has issued as many as 13,000 ‘learning-inbox’ toolkits to fresh hires. These kits contain reading material, notes and training modules in electronic form.

“As we stagger hiring, the kits help us to shave off up to two weeks of training. At the same time, we ensure that the hires come business ready,” he said. Moreover, in slack times like this, the firm can use more internal trainers as against the more expensive external trainers.

Cut recruitment costs

Avoid layoffs, look for cost cutting alternatives. HR execs across the spectrum, however, do not favour layoffs. They would rather go for deferral of allowances and salaries, temporary withdrawal of benefits and options like leave without pay.

A senior tech professional recounts: “In an economy hit by global slowdown, an organisation of 400 people had 100 non-billable resources. With mounting costs, the firm found it difficult to hold on to these resources and had no choice but to retrench. It took its staff into confidence and they came up with a solution: a 20 per cent salary cut across the board. With the consequent savings they held on to the 100 resources. This proved to be a masterstroke.”

Mahalingam says they have been improving recruitment efficiencies like giving more emphasis to employee referrals and leveraging job boards/portals.

Reshape salary packages

Salary packages are being reshaped too: “Now there is higher proportion of variable pay or ‘pay at risk’. Through the year, more and more firms have increased the use of variable pay and expanded the use of long-term incentives, both of which give employees a greater stake in the organisation's success and performance,” says Alaganandan.

“Companies are changing their compensation packages. Earlier the fixed-variable pay component used to be a 70-30 mix; now it has been revised to 50-50,” said People Connect CEO Sarjeev Sethi.

Thiruvengadam says companies are trying to reduce costs by doing away with fancy perks, trimming bonuses, keeping training onsite and cutting down on transportation. HR managers, he feels, do not want to touch soft perks but are very sensitive to monetary outgo.

Create new performance rewards

An insider at Intelenet Global Services’ back office operations at Navi Mumbai said that a number of measures aimed at cutting incentives and increasing employee workload have been introduced within a couple of processes. Firms are also going forward with a holistic approach towards rewards: a combination of non-cash elements and long-term elements like learning and exposure to leadership.

Revisit talent retention techniques

There will be pressure on retaining top talent since this segment is crucial to take the organisation through difficult times. Differentiators in pay and performance management will need to be built in, and the approach to hiring will focus on controlling talent costs strategically. But Alaganandan says the workforce will have to balance risk and rewards in their careers, giving hard thought to what it is that truly motivates them in their careers.

“A new relationship between employers and employees will require a different approach to employee retention” says Sunil Goel of GlobalHunt. “Bring in individuals who will thrive in the environment you offer, check in with them often, work with them individually, and use targeted metrics regularly to evaluate your success,” he says. Employee engagements are on the rise with staff surveys being done by Satyam and Juniper and counselling sessions being carried out by some others.
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