At the recently held Nasscom’96 Leadership Summit in Bombay, Dr. C.K. Prahlad, the mahaguru of management hinted that the Indian IT industry, with a compounded annual growth rate (CAGR) of 45 per cent, needed more ‘imagineering’ in order to be reckoned as a world class player. Some high level HRD honchos and hardened headhunters are now mumbling, “In the same breath he could have warned some US companies about buccaneering and poaching from the Indian skill pool.”
So it was not surprising when TCS, Madras, hit the front page for filing a civil suit to protect its skilled ranks from poachers. The general feeling was that this could be happening to any company. But unlike TCS, not many could articulate this unspoken fear. Last week, a division bench of the Madras High Court upheld an interim injunction granted by Justice A.R.Lakshmanan. The injunction restrained Mastech Corporation of the US. Pune-based Scott Systems and their representative Sunil Stephen from recruiting any more TCS employees until the civil suit filed by TCS was decided. In its suit, TCS said that 135 employees left the Madras office between January and August of 1994, and of these some 50 had flouted contractual obligations. Further, it contends that the US Company did not have any training programmes like the one it offered, but offered blandishments like green cards and work visas to lure employees. The interlocutory order prevents the US Company from recruiting any more TCS personnel by encouraging them to flout their contracts.
Says S. Mahalingam, vice-president, TCS Madras, “I don’t want to comment on a sub judice matter. But I would like to clarify that we have no problems about people seeking better prospects, only this modus operandi of luring trained professionals is not a healthy practice, especially when they are encouraged to float contractual obligations.” Now TCS has decided to do something about this. While a company of the size and clout of TCS can take legal recourse, there are many in the IT industry who feel that one cannot really put a curb on free market forces as it were. “It is a question of supply and demand. It is a question of supply and demand. I feel this poaching phase will be temporary and not worth getting centralised as some Bangalore companies are doing,” says S. Ramanathan, former president of the computer society of India, Madras. “Creating and building a trained pool of professionals is far more proactive.”
K.V. Ramani, Chief executive of the Rs.7.5crore Future Software thinks the problem starts at the US end. “This should also be the US government’s responsibility,” he says. “They must classify companies according to the type of business. Often some IT professional sets up a body shopping mom-and-pop outfit in a garage, and then without much overheads start luring professionals from here. At Future we maintain a 100 per cent record of everyone coming back. Then, it is also a supply problem. Training institutes are mushrooming, but is the training relevant? Do we have skill fits? We need to think through this problem of adding to the resource pool.”
Every IT company, big or small has to address this problem in both its dimensions: at one level there are overseas companies and their NRI representatives luring trained and experienced hands with plum US assignments and dollar earnings. At another level, there are the smaller outfits, which cannot invest in training and development. They try to wean away employees from bigger outfits with astronomical salaries and perks. The reactions to attrition are many and from varied perspectives–from the purely altruistic to the belligerent.
Take K. Lakminarayanan, CEO, Dun & Bradstreet Satyam Software (DBSS) Madras. He is not unduly perturbed. “If each company thought of only short term needs, what happens to industry growth? I want to see beyond this shortage syndrome,” he says. “The solution is not to keep on increasing salary packages. This creates a catch-22 situation; smaller companies start poaching from others. At DBSS we spent 12 to 13 per cent on training. TCS itself is the mother of all software companies, which has given so many trained professionals to the industry. I feel, we should be useful to the industry, and keep on training more.” He further adds that these are highly creative people and need constant challenges in order to stay on, but bending backwards to keep on meeting spiralling salary demands is not the right solution. So when each company is constantly wary of being raided for talent even an innocuous recruitment ad rings alarm bells.
Recently – the Madras-based Square D’s prominent recruitment ad offering overseas postings and other incentives instantly triggered off the rumour that over 14 professionals had quit and that the company’s ambitious growth plans would have to be downsized. Unfazed, Square D’s CEO, G.S. Krishnamoorthy counters, “If 135 of a total of 3,000 TCS professionals quit, it is a mosquito bite on an elephant. What is the need for panic? This happens in every service industry. When KPMG set up shop, Coopers and Lybrand lost many people to them, now it may be KPMG’S turn to lose to McKinsey. It happens in the banking sector all the time.” He agrees that in the past year some software professionals had quit Square D, but the recent ad he claims is part of the plan parameters for a growing organisation. “We have done Rs.60-crore worth business for this year, and projected Rs.90 crore for 1996-97, and need to increase our strength from 700 to 1,000 soon,” he says.
L.K. Vohra, senior vice-president, human resources and corporate services, Square D, goes a step further and views the ‘dollor pull’ in a most pragmatic way. “The essential need is to provide timely opportunity to maximise their savings,” he says. “The dollor pull is extremely powerful.
Though Square D’s attrition rate at roughly 17 per cent is much better than the industry’s average, the key factor is prospects overseas. A software professional can easily save Rs.60,000 per month in the US on an average, which can never be compensated by an Indian pay package, however profitable it may be. So it has to be accepted as a reality. Policies can at best work to reduce attrition levels and delay the timing of separation for those in the two to six years experience group.” He also foresees many who have been ‘pulled’ by the dollar to return in the near future. But more than all these pulls, he advocates creating an environment conducive to the development of the ‘inner wealth’ of character. For this, the human resources management practices at Square D draw heavily from Stephen Covey, emphasising on character building along with skill and knowledge enrichment.
Not all CEO’s are fazed by the MNC threat it seems. N.R. Narayanamurthy, chairman and managing director, Infosys Technologies, Bangalore says, “We welcome more and more MNC’s here because they have forced Indian companies to raise their standards of employee orientation. I firmly believe one has to create an environment for professionals to stay on by improvingcompensation structure, openness, technology and HRD practices.” He is quite clear that creating a stakeholder orientation would prove to be a big pull factor in retaining employees. “The bright young professionals of today expect not just financial rewards, but also a well planned career path, and more learning opportunities. Infosys has initiated the country’s first stock option plan where stock is awarded based on both past and potential performance,” he adds. This disproves the widespread allegation often held about software professionals that like pilots’ they keep on increasing their demands. A stockholder is more likely to view and treat the organisation as his own. V. Vishwanathan, executive vice-president, Tata ELXSI, is just as euphoric about his company’s rate of attrition, which he claims is well below the industry average. According to him. Tata ELXSI has a lot of campus recruitment. “Hence there are mainly resignations from people who wish to people who wish to pursue studies overseas,” he says. Does Tata ELXSI also have the TCS-type-of-bond, which seems to be the main irritant for those who are quitting or even flouting contractual obligations? The TCS bond makes it mandatory that for every year served overseas, the employee has to put in two years of service in India. This, however, justified it may appear on the company’s part, is a source of tension for those who are bonded. Vishwanathan neatly sidesteps this issue. According to him this is confidential matter. “We wouldn’t like to discuss this,” he says, but adds, “Poaching from one another certainly harms everyone’s interest and will affect quality. Software companies have to go in for a code of conduct to avoid unhealthy recruitment practices.” Easier said than done.
This same concerted action is recommended by M.G.N. Unnithan, an HM(C) alumnus and management consultant, who has promoted the Bangalore-based consultancy firm, Career Reach. “One cannot say that the candidate’s freedom to join any company should be curtailed. At the same time poaching can be an irritant,” he says. “Movement of technologists can be regulated if the chiefs of companies agree to evolve and practice a recruitment policy that stipulates that no company will entertain a candidate unless he has completed a certain term with the company.” But more than the efforts to grab personnel from the competition, Unnithan is quite critical of the attitude of technologists who look on companies as mere training ground to gain the most in terms of skills. “The usual approach of a technologist from the IT industry to a recruitment consultant starts like this…….last year I have been trained in Unix, Oracle, C+++, blah, blah and have become an expert. Now I would like to change. Are they looking at these companies only as training grounds or don’t they have enough in these companies to retain them?” he reasons.
If filthy lucre is not always the lure as these top level managers claim, then the other critical factor is opportunities for growth in a technology driven environment that challenges the spirit. And almost all agree that very often this is the factor that swings a decision to stay on or quit. N. Krishnakumar, vice-president, human resources, Wipro Infotech group, lays great store by this aspect. “To attract the best talent we consciously work on building a strong brand equity for Wipro.” he says. “This includes working with institutes on a number of developmental efforts like seminars, helping students think through career issues. We also have a strong culture building exercise in Wipro.”
Krishnakumar also emphasizes that there is no exodus to other companies. “The TCS-type-of-situation is unique where a competitor consciously targets your people. With good HR practices our attrition rate is well below industry average,” he says. According to him, in any liberalising market it would be normal occurrence for new MNCs to hire people fromexisting organisations. In a competitive environment, an organisation should be prepared to lose some people to multinationals. “We have used reskilling and job rotation in an effective way; and also implemented performance management and employee development programmes, where both personal and professional needs are factored in,” he says.
While many in IT are intent on analysing the determinants and deterrents to attrition/retention, there is one 36-year-old managing director who stands apart literally, and says neither staying nor straying bothers him, because he is on a different mode altogether. Says Venkatarmana Raja of Ramco Systems, “We have a mission to accomplish……to be a great software company.”
Raja says that Ramco does everything an MNC does. “We do everything that a multinational does because we are an Indian MNC. I can’t tell you how many software professionals we have…I don’t want to give out our strength. But our product, MARSHAL, is in itself the main incentive for a professional. Yes, the aspiration to go abroad is very prevalent. We already have offices in the US and in Switzerland. Our people go abroad with a product they have created. We have executed six to seven overseas projects and over 30 here. We are market leaders for this product which can be used in any enterprise/manufacturing industry.” He believes that an MNC is sought out for its technology. “We have technology at Ramco, we don’t need to trade in other commodities. We are creating a product, not coding for another, or use body shopping. We don’t lose anyone to others,” he says.
At the same NASSCOM summit. Prahlad had urged the Indian IT industry to come out of the sub-contractor mould and become more than just a generator of solutions for companies worldwide. For this, he suggested tapping talent world-wide, especially the large NRI pool in the US. Ultimately poaching, raiding or enticing….call it what you may, can only be resolved by those offering hi-tech products and solutions geared towards competing with other software companies in the US in the solution/products category.