I have always believed that the Indian IT services ran a close ship with analogies to the traditional manufacturing industries. I actually wrote a satire post distinctly relating the IT industry concepts with the Supply Chain Management.
However, with the latest news coming in with Wipro and TCS talking of revamping recruitment structure over JIT model (Just in Time Model) once again brings out the point forward, that the companies are still running with practices borrowed from the manufacturing world.
This is an interesting trend displayed by the entire industry – this approach to governance has some very distinct advantages and some clear roadblocks. Clearly speaking the manufacturing Industry would be classified as the most mature industry with fairly evolved and benchmarked practices. Any industry / organization drawing its organizational structure would start with an advantage on the playing field. With the perfectly tried and tested processes initiatives like Six Sigma, Lean and JIT have over the years been refined and perfected to produce unparalleled efficiencies in a manufacturing setup.
So when I read that IT companies are indulging themselves further in the management practices of the manufacturing I was left wondering. To get the basics right first we need to understand the basic practice model of both the business areas, and then identify the relevance of such a step on the productivity.
Manufacturing specially the line manufacturing the productivity is a factor of Lowest Common Denominator, as in the productivity of the entire line setup would match up to the productivity of the lowest productive operation on the line. All the line manufacturing practices including the renounced TOC by Goldratt or JIT by Toyota proceed with this assumption.
However, in the case of IT when we model the people as resources and the deliverables output but still the productivity is never the function of the Lowest Common Denominator i.e. the slowest or the most inefficient resource. The productivity is essentially the function of the process itself with lesser dependence on individual resources. However the resources itself are skill based and very specific.
So with the basic premise in mind this JIT model for recruitment is something I would say the following drawbacks would actually be encountered this model, creating substantial road blocks for the IT companies:
The availability of the resources (read fresh engineers) in the market is only once in a year and since this is a selective process and most of the colleges controlling offers for enabling placement for all. The early bird would get a better quality of the talent, as already obvious IT industry being a talent sensitive industry and thrives on the capability of fresh graduates to learn and ramp up to be skill specific resources, they would be left with a lower quality of talent.
Obviously the talent identification by IT companies assumed to be sacrosanct here. Ideally the primary road block would be Early Bird Getting the Worm Syndrome, would be applicable in this case leading to early recruiter getting the talent.
Even currently with their current format the IT firms, even the premium ones have lost flavor among the colleges of great repute, since this kind of move removes the stability the IT job provided to the students, would seriously impact their preference for the companies. Anyways, attrition has always been a great problem in the sector since late 90’s, this would still further dissociate the fresh employees with the company leading to lower level of engagement and association
Generally almost all the IT companies have a lead time greater than 3 months from the fresh graduate resource being procured and finally tailored with multiple trainings and courses to be deemed fit for the quality of production of deliverables. Also given the way IT sales cycle is structured, the fresh engineers for directly being inducted into the project might not be an as smooth a process as it used to be.
The quality and scalability risk can be impending on the deliverables because of the reduction in the lead time; given the fact the quality of engineering education is not going to improve drastically to compensate for the lost time by the IT companies in JIT recruitment, it would eventually have substantial impact on the quality.
Vision and Future
Given the fact that almost all Indian IT companies are trying hard to break into the upper echelons of the IT and consulting world. It’s high time for them to concentrate on increasing the ARPR (Average Revenue per Resource) by specialized skill sets and quality than the way ahead not be concentrate and minimize the ACO (Average Cost of Operation) which is also important but certainly not the next wave of growth for them.
The zealous high end consulting out-shoots of these companies have not seen much light till now; and given the fact of rising costs on business in India and availability of other cheaper alternatives it’s high time for them to upgrade the playing field to a different level. This certainly is not going to happen by Just in Time recruiting.
While this Just in Time recruiting might provide them a short term breather from increasing costs and recession hit tighter US markets and would have some advantage as a short term tactics but using this as a long term strategy would not relate to the overall positioning of any of the larger IT majors.
It’s high time these bellwethers need to come out of the labor arbitrage shadow and look for a more independent and robust set of competencies in their recruitment models to ride the next wave of growth.