Wednesday, March 24, 2010

IT companies hire non-techies, cut costs

New frontiers are being explored and barriers broken. The information technology space is opening up for non-engineers, even as IT graduates find a new calling in the lucrative pharma and biotech industries. When Ishwar Prasad graduated from a Mysore college two years ago with specialisation in commerce, a career with one of Indias top three technology firms was nowhere on the agenda. However, Prasad went on to do a six-month diploma in computer hardware management last year and is now helping some of the leading telecom companies in the world manage their computer desktops and other infrastructure, from a remote infrastructure management centre at the tech firm. As tech firms automate their commoditised service offerings, they do not necessarily need engineers to perform all tasks. Instead, they are increasingly hiring non-engineering graduates such as Prasad for testing software applications and managing computer infrastructure of their clients in order to do more with fewer staff and at lower wages than computer engineers.

From nearly 10% of their current workforce, non-engineering graduates could account for nearly 20-25 % of the staff at companies such as TCS, Wipro and HCL, over the next one to two years. Multinational rival Cognizant already has almost 20% of its global workforce who are nonengineering graduates. Prasad is among thousands of non-engineering graduates being hired by companies such as Tata Consultancy Services (TCS), Wipro, HCL and Infosys for performing highly automated tasks of software testing and computer infrastructure management with the help of user-friendly, readymade platforms that can serve multiple customers. In my hometown, working for Infosys or Wipro makes parents proud. I could have never got into such companies with a commerce degree, but now many of my relatives think I have made it big and become a software engineer, says the 27-year-old. Companies such as Wipro are already readying their strategies for shifting nearly 40% of software services to readymade templates that can serve additional customers without having to hire incremental staff.

The prime impact of these delivery models is the asset-based view as opposed to a labourbased one, that is, less number of people for the same work and an increase in operating margins per employee, while simultaneously reducing capital expenditure for their clients. The impact on employee mix (those with a BE degree vis-a-vis non-BEs) will be there but will not be applicable for all technologies and domain areas, said Saurabh Govil, Senior Vice President HR, Wipro Technologies.

For years, India's $50-billion software exports industry has been hiring thousands of engineering graduates every year for writing software codes and processing back office tasks for top customers such as General Electric, Citibank and JP Morgan Chase. However, increasing wage inflation and rising attrition has forced them to seek ways to arrest linear growth. The skill mix today is different from a few years ago because of a fundamental shift in sourcing behaviour customers sourcing a broader range of services, including BPO/KPO, testing and IT Infrastructure Services (ITIS), said Shankar Srinivasan, Chief People Officer, Cognizant. While for the generic skill sets we hire graduates in science, humanities and commerce, for specialised areas we hire chartered accountants, statisticians, equity research analysts, lawyers, doctors, dentists, pharmacists and so on, he added.

If we are able to move a substantial chunk of our business to platform-based models that can be operated by non-engineering graduates with some familiarisation, we can lower our salary costs and even balance attrition, said the chief executive of one of the top Indian tech firms,requesting anonymity. Indeed, most of the entry-level computer science graduates are paid anywhere between Rs. 200,000 and Rs. 500,000 per annum by these software companies when they join, and with wage inflation of around 10% every year, the salary costs keep going up. If we can have 20-30% of our workforce from different backgrounds, it will help balance the equation and force traditional software engineers to think beyond pure code writing roles, the chief executive quoted earlier added.

Already, with companies moving to performance-linked billing models, wherein they are paid based on business results achieved and not on the effort put in, there is a need for software engineers to graduate to the next level. Clearly, India's code-jockeys need to evolve and manage more complex, closely linked with business kind of roles. People skills are always core in our business but the platform will automate mundane/repetitive tasks and provide workflow automation which will free up the engineers to focus on higher-end value addition work, says Piyush Dutt, Associate Vice President & Head-HR, HCL Technologies infrastructure services division.

Source: The Economic Times, March 19, 2010

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