Tuesday, February 5, 2013

IT Industry - A critical Perspective

Graduating from NIT Kurukshetra and entering into the corporate world in 1994 looked like a very elite milestone during those days. Knew that I was part of only 50,000 successful engineers to do so in India. If you are graduating as an engineer today then you are one among 600,000 engineering graduates being churned out and more than half, irrespective of your primary discipline, will get absorbed in the IT industry.

No wonder fresh graduates entering the (IT) industry find themselves to be part of a herd having to grapple with 9 hour work rules, dress codes, strict adherence to processes, online trainings, under-staffed HR and under-pressured recruitment and resource management groups. Recently I was at an IIM for a lecture on the industry and wasn't surprised to hear severe discontentment among the students who worked with IT companies and were forced to pursue their MBA with an intention to switch to an alternate career. Reminds me of the infamous 'Cattle class' comment Shashi Tharoor once made !

While introspecting our journey in the last 2 decades, I find that there are two areas where we went wrong:

1. We, as industry leaders, have fallen prey to our own success. According to management theory, the best time to change is when you are down-under! Does this imply that when times are good there is no need for a change? It seems so because when the industry was riding the wave of labor arbitrage in the nineties, I wonder if any of us was thinking about what happens when the tide ebbs. Perhaps that was the time for us to work overtime to build strong domain capability whereas we  were all busy making ourselves operationally efficient and improving our profitability. As a result we continued to rely on traditional outsourcing models that are highly dependent on individuals rather than capability. So the only way we have learnt to increase revenue is by increasing people. Top 5 IT services companies today employs over 800,000 professionals up from less than 8,000 only 20 years back!

2. Okay, so we did not devise alternate models that were competency based and waited for too long but then why did we have to resort to 'Cattle Class' policies ? As the industry scaled we were in dire need of leaders who were expected to lead and not manage. Let me tell you a story that will perhaps explain what I am trying to state. I know someone, let's call him Prasad,  who joined a mid-sized IT services company and was greeted by the MD with a rose and a personalized message on day one. Of course there were just 200 people then and as the unit scaled to 2000, not only was Prasad expected to do just the same as his MD did but should have passed on that culture to his next level. Unfortunately the tradition stopped soon after as Prasad became busy running his own unit and never understood the importance of building a culture. Prasad's MD couldn't see the culture die so had no option but to devise a process of welcoming new employees by sending them a rose in an email ! Culture was "stabbed" that day.

Couple of years back I was in an HR conclave attended by the biggies of the industry and in one of the sessions HR heads from various companies debated passionately on how they have streamlined induction training and one HR head stood up and proudly announced  how they have completely 'automated' the 'process' where induction program is now video based with no 'human intervention'. We continue to stab the dead corpse!! Take 9 hour rule for instance. In any company of decent size, it is estimated that about 15-20% employees abuse flexibility so when companies devised 9 hour rule  it looked very fair and justified. While managing scale, one often relies on the front-line manager to uphold organization's culture & traditions but since we haven't had the time to groom them so no wonder there is misalignment & mistrust in the system. Policies have replaced what culture was doing before or is supposed to do.

So why didn't we create a culture by aligning front-line managers? That has to do with how we have rewarded managers. Today you can barely count on your fingertips the number of companies who disproportionately reward managers and leaders for imbibing culture and grooming leadership. We have chosen to rather reward on P&L accomplishments. The results are in front of us. We are operationally best in class but continue to struggle with emotionally relating to our employees, whom we fondly call "resources".

All is not lost, we need to focus on two things for course correction and both are easy said than done:

a) Continue to spend disproportionate time in innovating and
b) Celebrating those who build cultures and groom leadership.

Try doing this and we have a chance of making the "Cattle Class" tag disappear and continue to lead the outsourcing industry in the world.


Devil said...

Really 100% true sir. I am following you since last 3 years and every-time I get a chance to attend your speech or read something written by you, I get to know a different direction to think.

Thanks A Lot !!

Unknown said...

Thank you for sharing it. Quite informative and a good read for budding managers.