Our
discussions with Ram Ramamoorthy, Country Business Manager, Hewlett
Packard (India) Ltd.
An
overview
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 exceeds
thousands. However, a western organization employing professionals
on this scale would be an industry leading behemoth.
The
average size of a software exports company has grown by 25% over
the year. Both profitability and average revenue have also grown
between 30% and 50% but the marginal increase in productivity
has not gone up much; it is 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.
A
quick look at some of the causes:
- Training:
The software export companies averaged 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. Whereas, MNCs operating in the domestic IT industry
set aside at least two weeks for training per employee per year;
may be more on management and seminars. However, the point is
that Indian software companies allocate less time for manpower
training.
- Rapid
Expansion: Indian software companies have to cope with high
employee attrition rate and at the same time, address the manpower
shortage associated with business growth. Very often we hear,
'Our company has a lower attrition rate than the industry, we
have only 18%, they have 25% attrition, the industry has 12%...and
so on. The industry combats the result of both issues at the
same time; may be by making compromise on the quality of manpower
that it takes in.
- Nature
of the jobs executed: Many of the Indian software companies
execute coding and other implementation oriented jobs as sub-contractors
for other companies from the West. Highly lucrative and productive
assignments such as solution design and architecture or product
conceptualization are in the hands of the companies that own
the customers in the overseas market.
Currently,
Indian software companies are going through a phase of recognition
by global community. In the just concluded CeBit fair in Germany,
the German Chancellor announced that German companies should look
at utilising Indian software talent for accelerating their industrial
growth. More and more companies like GE are setting up their design
centre in India. There is an excellent opportunity for Indian
software industry to move from a status of ‘software coolies’
to ‘software masters’. With such as an upward movement, the
productivity of Indian software industry will surely go up.
