India lags Lanka, Bangladesh in labour efficiency

The United States remained the most productive economy in 2006 in terms of labour productivity per person, far outstripping its nearest rivals among other developed economies, the ILO said in its fifth edition of bienniel report titled "Key Indicators of the Labour Market".

US workers added 63,885 dollars (46,890 euros) of value to the economy per person, way ahead of its nearest competitors Ireland (55,986 dollars), Luxembourg (55,641 dollars), Belgium (55,235 dollars) and France (54,609 dollars).

However, the ILO noted that this is chiefly because Americans work more hours per year than in most other developed countries. When productivity is measured in terms of value added per hour worked, Norway came top with a level of 37.99 dollars -- though the US does then come second with 35.63 dollars.

In South Asia, including Bangladesh, India, Pakistan, Nepal and Sri Lanka, productivity rose by around 50 per cent during the same decade, the report said. However, India's labour productivity, which is pegged at $6,587, is way behind Sri Lankan's productivity level of $11,320, Pakistan's $8,247 and Bangladesh's $43,315.

South-east Asia includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam while East Asia comprises China, Hong Kong, Japan, South Korea and Taiwan.

But South-east Asia sharply reduced its rate of vulnerable employment - defined as when a worker is at risk of falling back into poverty - by 5.7 percentage points to 59.2 per cent. That put the region ahead of South Asia at 78.2 per cent but behind East Asia at 56.2 per cent.

Increases in productivity are mainly the result of companies combining capital, labour and technology better, the report said. A lack of investment in people, equipment and technology can lead to an under-utilization of the productive potential of labour.

Rising productivity levels in Asia are a boon and not a threat to the world economy, as growing prosperity spurs a demand for products made elsewhere in the world, the International Labour Organisation said. "Some see the impressive growth of productivity in Asia and South East Asia as a threat, but let me stress that it is in fact a positive trend for the world economy," said ILO employment executive director Jose Salazar-Xirinachs. "As their middle classes grow, they earn more money, they consume more goods and services, so these regions will become consumers for goods and services produced in Western countries and in the rest of the world," he added.

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Key Indicators of the Labour Market (5th Edition) - ILO

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Want big bucks? Try the realty sector

The following is the gist of article published by rediffnews.com on the emerging career opportunities in the real estate sector.

In the back drop of DLF raising India's biggest IPO, the Bombay Stock Exchange introducing an index for it, with foreign investment of $10 billion is expected to flow into the sector over the next 12-18 months and with the sector growing at 30-plus per cent in the next few years, the realy sector is slowly on its way towards consolidation and transparency.

The growth potential of real estate is immense for people looking to make a career in it. Among college students, graduates and working professionals -- especially those with management, engineering and architecture backgrounds -- realty studies are fast becoming a favourite.

Enrolments are increasing in institutes offering short-term diploma courses as well as in colleges offering real estate specialisation in their Master's programme. P.S.N. Rao, professor at the SPA, says that on an average 20 of the 75 students from the Masters in Planning program choose to do a thesis on real estate. "This figure was negligible when the course was introduced as an elective 10 years ago," he adds.

Dedicated institutes have sprung up and management schools have introduced specialised courses on the subject to cater to the increasing demand. Indian School of Business (ISB), Hyderabad, launched a course titled 'Property Finance and Investment' last year. The Pune-based Indian Institute of Real Estate (IIRE), affiliated with the National Association of Realtors (NAR), a leading association of realtors in the US, had 10 students when it was launched in 2001. "Today, we get more than 3,000 enquiries per month for our online course," says Suresh Malkani, founder and academic dean, IIRE.

A number of real estate MNCs have already set up shop in India; more are following suit. Home-grown firms, too, are joining the fray, pushing up the demand for qualified personnel. "There is an immense dearth of trained manpower in this sector," says Nirmal Purushottam, principal, Yajnas Academy of Real Estate Management, Hyderabad. His views are backed by Haresh Motirale, senior manager, marketing and sales, G:Corp Properties, Mumbai, who completed a course from the IIRE in 2002. "A specialised course definitely gives you an edge over those who haven't done it," he says.

Besides the technical essentials, realty education focuses on management studies. "Realty management courses give students a managerial perspective and help them understand finance and marketing," says Purushottam. Industry watchers say the day is not far when campus recruitments will become the norm in the real estate sector. "Our students are posted in companies like Tischman Speyer, JLLM and Macquarie Group," says Bhuvana Ramalingam, director (communications), ISB. "They are offered positions like general manager and senior manager."

Consider Delhi-based Anu Punj, 23, a graduate from the SPA with specialisation in Housing. She was snapped up immediately after her course by Emmar-MGF, a leading realty MNC. She is working as an assistant manager (planning) in the firm now.

Master's courses are generally comprehensive, covering several aspects related to housing and real estate. Says Madhu Bharti Sharma, head of the Department of Housing at CEPT, "The Programme of Planning, with Housing as a specialisation, covers housing policy, housing requirement, housing finance, land economics, real estate development and various methods of development (commercial, residential, resorts and leisure)."

Expect five-figure salaries at the entry level. As the property market gets more organised and competition intensifies, the figures are bound to get better.

The ISB, in partnership with two London-based schools, has instituted the country's first Research Chair in Real Estate and Urban Studies, besides forming a Real Estate Club to promote realty education.

Full Article:-

Want big salaries? Try the realty sector - Rediff News - September 07, 2007

Talent Crunch Hits HR while the role of HR is also transforming

Amid the issue of overall talent crunch in skilled manpower, the real challenge facing before India Inc. - the shoratge of HR professionals. Industry estimates show that for every 50-75 people recruited, one HR job is created. However, comapred to the jobs being created each year, the number of HR professionals seems minuscule.

In 2007 alone, approximately 3,37,000 employees are expected to join the software and services sector, for which around 4,500 HR professional will be required. However, there are only handful of institutes that offer exclusive courses in HR, of which Tata Institute of Social Sciences(TISS), XLRI and SCMHRD are most popular. These three institutes put together produce approximately 200 students each year. This supply-demand mismatch in the IT sector alone is indicative of the larger picture. Experts say India will require 28,000 competent HR professional next year, but there seems to be little happening on the supply side.

The industry attribute the shortage to mindset issues. Students prefer specialisations in finance and marketing over HR, as Management trainess at the first level in HR get comapred to their counterparts in finance and sales department and the main reason being the lack of recognition.

Another issue is the increased level of attrition in HR. Addressing the issue of ‘Managing Attrition & Aspirations’ at two-day International Management Institute (IMI) HR Summit on August 30, Rachna Bhanot, Head (Strategic HR), IBM Daksh said, “Attrition is the result of lack of alignment of various aspirations of industry, organization and individual. So there is a need for alignment between aspirations of these three stakeholders to get a win-win situation… The role of HR managers is now changing from personnel management to talent management where they manage competency, succession and performance.” The two-day summit was centered on the theme ‘Managing Talent for Global Competitiveness: Issues and Challenges’.

The two day HR Summit also saw an Inter B-School paper competition on the issues of ‘Taking HR from the Backroom to the Boardroom’, ‘Attrition: A Blessing in Disguise?’ and ‘Does the IT/ITeS industry need Unions?’ IMI short-listed the teams for the final round out of 156 entries from different business schools. On the occasion, papers were presented by the teams including the Indian Institute of Management (IIM), Kozikode; Indian School of Business (ISB), Hyderabad; Indian Institute of Foreign Trade (IIFT), Delhi; Institute of Rural Management Anand (IRMA), Gujarat; and International Management Institute (IMI), Delhi.

Sangeeta Sabharwal, CEO of executive search firm, Confiar India, in her address at HR Summit, said that the role of HR professionals was next only to the CEO’s role in importance. Elaborating on HR’s role, Ms Sabharwal said, “Earlier it was finance and marketing that was next to CEO’s role but it’s HR now.” She was of view that the role of HR is now more than only tackling personnel and emotional issues: HR must deal with the much bigger issue of managing talent. “Human capital is increasingly becoming the source of value creation for organizations so it is very important to mange the talent.”

The buzzword ‘Outsourcing in recruitment process’ was another issue that got attention during the panel discussion. While addressing the issue, Mr Amitava Saha, Head (Talent Acquisition) First Source, said, “There is abundant talent but not enough to match up to the increasing number of jobs which leads to Recruitment Process Outsourcing (RPO). Outsourcing is spreading like a virus in India and our country is a preferred destination for RPO.” On the other hand outlining the future of RPO, Mr Rajiv Gupta predicted that, “India will lead the global RPO industry and an Indian RPO provider will be among the top three global RPOs by 2012.”

Closing the session, IMI Director Dr C S Venkata Ratnam in his concluding message highlighted the need to hire and integrate the talent of different skills. He said, “While hiring talent companies face lots of conflicts and to reduce these conflicts companies need to hire people with different skills. So don’t hire the clones. I think the role of a manager is similar to a conductor of an orchestra, where different kind of talents and instruments integrate with perfect harmony to create melodious music.”

Related Articles:-

• IMI HR Summit: HR leaders debate on attrition management and employee engagement - mbauniverse.com - August 31, 2007
• IMI HR Summit: “It was finance and marketing that was next to CEO, but now it’s HR,” says Sangeeta Sabharwal, CEO, Confiar India - mbauniverse.com - September 01, 2007

Corporate India attracts IAS talent pool - a degree from IIT, IIM or ISB an added advantage

This is an article published in The Economic Times on September 02, 2007 regarding the reverse drain of talent from the Government's prestigious service IAS (Indian Administrative Service) to the private corporate sector. The main reason are high disaprity in pay between government and private sectors in recent years, low recognition and inability of the Government to encourage the talent, uniform rules for promotion independent of their ability and skills and last, but not the least, not enough job satisfaction.

In this reagrd, I want to tell my story. I have completed my B.Tech in Electrical Engineering from IIT, Kharagpur in the year 1993, when the IT boom has just started. I got a campus offer in TCS, but I denied the offer and joined as Technical Officer in ECIL (another campus offer) in Hyderabad so that I can prepare for civil services. The salary offered at TCS was around Rs. 8,000 p.m., in ECIL I used to get around Rs. 5,500 p.m. in the year 1994 and when I joined as Assistant Commissioner of Income Tax (ACIT) in the Indian Revenue Service (IRS) in 1997, I used to get around Rs. 8,000 p.m i.e. the parity between the I.T. sector and government salary in late 90s was almost 1:1 or 1:2 at maximum. Now, if you take the reccent salaries of fresh graduates from IITs, they are hovering around Rs. 15 lakhs per year on an average, where as now the entry level salary for an IRS officer is around Rs. 2 lakh per annum, making the ratio at almost 1:15. Now, you see the glaring disparity between the government salary in All India and Central Services, recruited through a rigorous and year long process through Civil Services Examination, conducted by UPSC , followed by interview, attracting the best talent in India.

Indian corporates have started discovering a huge talent pool — the coveted Indian Administrative Service (IAS). In fact, more and more mid-career IAS officers have been abandoning their white ambassador cars to jump into the private sector bandwagon as companies such as Reliance Industries, GMR Group, DLF, McKinsey, PricewaterhouseCoopers (PwC), Infrastructure Development Finance Company(IDFC) etc. are wooing the government babus to handle key projects.

Unlike the earlier recruits, the officers who have recently been hired with fat pay packages of Rs 50 lakh to Rs 3 cr per year, are not assigned mere liaison work with the government, but are asked to carry out difficult project implementation tasks.

What’s more, the officers with IIT and IIM backgrounds, or those with specialised degrees from foreign universities have a clear edge to grab opportunities at the private sector.

Whereas Assam cadre IAS officer O P Agarwal of the 1979 batch joined IDFC in August this year, Dhiraj Mathur, an MP cadre officer, is joining PWC this September. Significantly, Mr Agarwal who served as a joint secretary in urban development ministry till recently, completed his masters in transport from MIT.

Rajkamal, a 1994 batch Chhattisgarh cadre IAS who completed his MBA from Indian School of Business, Hyderabad, resigned from the service to join McKinsey. A Gujarat cadre IAS officer Jayant Parimal recently joined Reliance Industries. A 1986 batch West Bengal cadre Ravi Kant, who holds a degree in civil engineering from IIT Roorkee and masters degree in economics from University of Manchester, UK, joined Ramky Group. He is now the MD of one of the group companies — Ramky Enviro Engineers.

Significantly, the buzz is that many IAS officers who are either on deputation with private companies or on long leave, may quit the services soon, SundayET has learnt. It’s also learnt that Anil Kumar Kutty, a joint secretary in the ministry of power, has received an offer of Rs 1.5 cr per year from a power company. Mr Kutty, who has been on leave for the last two years, could not be contacted. Not all of them need to quit.

Some of them even go to private companies on deputation. A Kerala cadre IAS from 1992 batch Sanjeev Kaushik, who holds an MBA degree from London Business School, has taken leave from the government to work with Lehman Brothers.

High Attrition Rate Continues To Plague Services: ASSOCHAM Survey

Unabated level of attrition rate continues to plague India Inc and spreading fast from IT and ITes to other service sectors such as civil aviation, financial services, retail and engineering, according to an ASSOCHAM Eco Pulse Study. The highlights of the study are:-

• While the attrition rate in IT and ITes sector has slowed by 10 per cent to fall in the range of 25-30 per cent in the year 2007 as compared to 35-40 per cent rate in previous year but the services sector at the crucial juncture of their growth including civil aviation, financial services and retail are facing tough times in retaining their staff.
• Big time consolidation in the civil aviation sector has fuelled attrition to an unmanageable level of 46 per cent as the pilots and cabin crew spot opportunities in growing demand by domestic as well as foreign airlines.
• Dearth of professionals, technical nature of operations, increasing finance-KPOs and attractive salary packages have led to rising job hopping at entry and middle level in the financial services sector. The attrition level has increased from 32 per cent in the year 2006 to 44 per cent in the current year.
• Banking, trading and real estates are facing maximum problem due to the job changing by the human resource.
• Massive expansion in the retail sector is accompanied with rapidly increasing attrition rate to even to the extent of 50 per cent in few cases. The companies now prefer to sign bonds for three years as they are imparting them the necessary training and specialized knowledge of retail functions.
• Growth in construction activities in the economy has led to surge in demand for engineers, resulting into increase in their movement across companies at rate of 25 per cent. The engineering companies are sorting to pay hikes and growth assurance, to curtail the attrition level.
• Level of attrition rate in the manufacturing sector has remained almost same at 20 per cent in 2007 as previous year. The functional areas like those of production, maintenance and safety controls, bear highest attrition problem.
• Loss of intellectual property is one of the most challenging problems faced by the companies as an upshot of attrition. Hospitality, IT, hospitals, engineering sectors are worst affected sectors in terms of intellectual property loss especially in absence of any laws to protect interest of an organization from employee turnover.
• The Study has found that the maximum of attrition is taking place among the employees who are in age group of 26 to 30 years. It found that the segment of employees who are most vulnerable to change are with experience range between 2 to 4 years.
• The most stable chunk of employees is found to be in age 39 to 45 years as they find themselves to be unsettled in their jobs and companies that they have been associated.
• Attrition trend also reveals that women employees are less prone to frequent job changing than their male counterparts. For every 10 males jumping the fence by changing the job, there was only 2 females crossing over.
• The immediate gains in salary package was found to be responsible for job change in almost all the sectors, however the growth potential remains an important reason prompting employee movement.

Appreciating rupee did not deter hiring spree by softwrae companies

As per the report of Assocham, IT sector along with other sectors continued with its hiring spree during April-July this fiscal, despite being hit hard by the appreciating rupee, which ate into the profitability of a majority of sectors.

The highlights of the study are:-

• IT jobs constituted nearly 24 per cent of over 1.47 lakh vacancies listed on job portals and in newspapers during the period, followed by financial services at 14.5 per cent and sales and business development at 13.5 per cent, it added. The IT sector provides employment to over 1.6 million people directly and to about 4 million indirectly.
• The engineering sector constituted 8.7 per cent of the employment opportunities created during the said period. Job opportunities in sales and business development have beaten financial services openings listed on job portal. While the former had a 15 per cent share, the latter accounted for about 11.5 per cent.
• "Though, robust growth of economy has created numerous vacancies, severe shortage of the talented workforce and high attrition rates continue to plague the industry," Assocham President Venugopal N Dhoot said in a statement.
• Major demand for the finance personnel emanated from sectors like banking and real estate, which are estimated to hire 1.40 lakh recruits this fiscal. Human resource or administration portfolios accounted for seven per cent openings. HR professionals constituted just about 1.5 per cent of the total graduates, indicating a limited choice for firms in the sector. Manufacturing sector comprised just 6.75 per cent of the vacancies, it added. Other professions such as medical, law, media, airlines and ticketing among others constituted almost 19.5 per cent of the positions advertised.

Source: The Economic Times - August 14, 2007

Rising rupee may hit IT hikes

This is a very good article published today in The Economic Times on the impact of rupee appreciation, which may become a permanent macro economic phenonmenon, on the pay hikes as well as on recruitment in Information Technology sector, which bore the brunt of rupee appreciation effecting the margins of IT companies. As already told, every 1 percent appreciation in rupee against US dollar, the margins of export oriented IT companies are effected to the extent of 35-50 basis points or 0.35 to 0.50 percent.

Is the IT party over? For the moment, it looks so. With the strong rupee impacting adversely the profits of every IT company, salary increments are expected to take a hit. And more of the salary is likely now to become part of the variable component, so that you get more only if you work more and perform better. “There is tremendous pressure to keep costs down,” says Venkat Shastry, partner in executive search firm Stanton Chase International.

“Over the next few quarters, I don’t see anybody providing for any serious salary increases or making corrections, even if that means higher attrition. It’s been madness in 3 to 10 years’ experience category in the past few years. That will taper down.”

Salary cost is by far the biggest component of cost, accounting for 45% of IT companies ’ costs and 40% of BPO costs. With many mid-size and small IT/BPO firms seeing a fall in profits in the Q1 of this fiscal, and most larger ones witnessing a sharp slowdown, varied options are being considered to keep the salary component under check or to get more work out of each employee. The pressure to do this is more so as Indian IT’s competitors like IBM, Accenture and EDS have not been impacted by rupee rise as much, given that they have only a fifth or less of their workforce in India. Says Gangapriya Chakraverti of Mercer India, “Variable pay will come up in a big way. Compensation related to productivity and contribution will take over. Companies will have to be careful about headcount. They will no longer have the luxury of maintaining a large talent pool that’s sitting idle.” Such pools are maintained to provide for attrition or to use in the event of the firm suddenly bagging a big project.

Adds Gautam Sinha, CEO of TVA Infotech, “The mid quartile which has been getting close to 15-20 % increments in compensation packages, will see tightening. Companies might not decrease the percentage of increment; instead they might link it to productivity and performance and downsize number of people being awarded raises. This is because companies are getting work and signing new deals. So they need the workforce to deliver the job. But they can afford to be choosy about who they want to appraise.”

Rupee’s rise is expected to hit BPO employees harder than IT. Unlike infotech, where 30% to 50% of employees work onsite and paid in dollars, in BPOs, 90% of the work is done in India and employees are paid in rupees. “Mid and senior level executives in BPOs have been getting increments of 14-20 %. I think that will come down to 8-15 %. Overall weighted average of increments used to be 7-8 %. That may be down to 4-5 %,” Vashistha says.

The Source : The Economic Times - July 23, 2007

PM's Panel is bullish on Indian economy but with caution

The Prime Minister’s Economic Advisory Council, headed by former Reserve Bank governor C Rangarajan has observed and also recommended following measures.

1. Riding an investment boom, the Indian economy will grow 9% in the current fiscal on top of last year’s 9.4% growth and price rise will be contained at 4%.
2. The economy’s managers will have to make some tough choices like curbing the inflow of external debt, allowing the rupee to appreciate further and removing “administrative and procedural impediments” to acquisitions abroad. It sees the external environment as still being benign and expects sustained investment to keep growth booming. The need to curb capital inflows comes from the mismatch between the current account deficit, which is seen at $17.4 billion, and surpluses on the capital account (nearly $58 billion). The excess inflow of foreign capital can make the rupee far too strong; managing this would mean jacking up money supply which could harden inflation and eventually interest rates. A sensible policy response is to allow all these three things to happen in moderate doses and to discourage external borrowing for rupee expenditure.
3. The council is not in favour of disrupting foreign equity investments. “Equity investment by its very nature is high risk and policy continuity is an essential element to initiate and maintain such flows. They cannot be turned on and off at will. However, on the debt side, there are some areas that can do with some scrutiny,” it said.
4. The panel suggested three instruments to face the strong capital flow: allowing the rupee to appreciate, sterilising capital inflows in excess of what can be absorbed into reserves without pushing money supply growth above 17.5%; and instituting a policy of encouraging capital outflow and discouraging external borrowing for rupee expenditure.
5. The report pegged farm growth at 2.5%; industrial output at 10.6%; and services at 10.4%. Mr Rangarajan cautioned that unless the farm and power sectors grow, the current rate of economic growth cannot be sustained. “Food security is an extremely important issue. Agriculture should be priority, as 60% people are dependent on it.”
6. The Council expects that there will be no unemployment by 2010, if not earlier. Whether people are satisfied with their remuneration or not is a different matter, panel's chairman C Rangarajan qualified promptly. "The unadjusted employment elasticity for the latest period (1999-2000 to 2004-05) is 0.48. Even after adjusting sectoral elasticities to lower figures, it is seen that with a GDP growth rate of 8%, by 2010 the workforce will become equal to the labour force. A stronger growth rate, which is quite possible, will take economy to this point even in a shorter period. Economic growth has been a major driving force in achieving higher level of employment," EAC's Economic Outlook 2007-08 said.

Related Articles:-

• PM's panel seeks inflow curbs - The Economic Times - 17-07-2007
• Jobs for everyone by 2010: Economic panel - The Times of India - 18-07-2007
• GDP growth to be 9 pc; inflation 4 pc: PM's economic panel - The Hindu - 16-07-2007
• India can achieve 10% growth in 2008-09 - The Economic Times - 17-07-2007
• PM panel pegs GDP growth at 9%, inflation at 4% - 16-07-2007 - Business Standard - 18-07-2007
• PM's panel sees economy growing at 9% - Moneycontrol India - 16-07-2007
• Official optimism - Business Standard - 19-07-2007
• EAC projects 9 p.c. GDP growth - The Hindu - 17-07-2007
  

Investment bankers reap in bonus heaps

Investment bankers never had so good time. With the entry of Wall Street firms and a rush to lure talent, bankers are lapping up unheard of bonuses. Brokerages within the banking groups have been the biggest gainers, besides M&A advisory and structured finance divisions. A surge in stock volumes, increasing number of deals and a growing appetite for new financing structures are driving pay-outs in a segment that is scounging for talent.

Bonuses this time have been in the range of 100-300% of salaries in most well-known investment banks. Some of the bigger brokerages that have seen an increase of 50% in their top line also doled out hefty pay packages to their key employees. According to the market sources, one of the biggest bonuse payoffs went to a head of a foreign brokerage. The amount: over $3 million. The research head of the organisation also received an equally impressive bonus.

The secondary market has witnessed an impressive growth in trading volumes this year. On the Bombay Stock Exchange (BSE), total volume rose nearly 18% in F.Y.07. On the larger bourse National Stock Exchange (NSE), the turnover rose nearly 24%.

While bonuses may have surged, the numbers have widened between Indian banks and overseas players. Bonuses amongst the larger overseas players range between 175-300% while those for the bigger Indian outfits are lower at 125-175%. Some of the bigger Indian players like Kotak Mahindra are yet to announce their bonuses for the last year.

Some of the biggest paymasters include CLSA, Deutsche Bank, Barclays, Merill Lynch, Citi and UBS. Media sources further add that while Deutsche has given a bonus in the range of 250% to 300%, in the case of Merill Lynch, it has been 150% to 270%. JP Morgan has also rewarded most of its bankers with nearly 300%. ICICI Securities' bonus payout has been in the range of 100% to 175%. In the treasury side of business like forex, derivatives and structured financing (in areas like real estate), payoffs were fatter compared to past years, but the numbers are much smaller than those given on the brokerage and research side. While there has been a rise in the number of people who received bonuses of over $1 million, the sharpest rise has been in the range of between $0.5-1 million. The number of bankers who received bonuses in this range is said to have more than doubled. In order to attract talent, newer foreign players have paid hefty sign-on bonuses. In the recent past, players like Goldman Sachs, Lehmann and Credit Suisse have entered the Indian market.

Source : The Economic Times

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IT companies to go non-linear manpower-revenue growth

In a significant shift from traditional business model, IT companies, both big and small, are looking at de-linking manpower growth from revenue growth. Companies are targeting higher revenue per employee rather than simply adding more manpower with the same productivity. This process results in more innovation, higher productivity and better use of resources in the medium term. It may not reduce the employee intake in near term but it has overall effect of reducing the new employment opportunities in the IT sector in the medium to long term.

The $4.3 billion TCS, with a head count of 89,419, does not intend to become, say, a 5,00,000 people company. Even Infosys is looking at business models that bring in higher per capita revenue and de-link revenue from manpower growth. This is more important as these companies earn substantial revenue in dollars and there is a likelyhood of appreciation of Rupee against Dollar in the medium to long term, bringing pressure on the gross margins.

At present, the revenue per employee in the domestic industry is much lower than what global players are able to extract: it ranges from Rs. 25 lakh to Rs. 40 lakh. On the other hand, for global companies, the revenue ranges from Rs. 70 lakh to Rs. 130 lakh.

To change the linear relationship betweeen manpower and revenue, the companies have to move up in the value chain. In TCS, for instance, till a few years ago, almost 90% of the the revenues came from the application space. This has now come down to 50-55% as the company has scaled up new service lines and provides end-to-end solutions to the clients. High growth services like infrastructure management, consulting and BPO now account for 18% of TCS revenues comapred to 10% in 2005-06.

Some of the small and medium sized companies aiming at reducing manpower dependence by using productivity tools and automation. Pune-based Zensar Technologies has built a model known as "solution blueprint" (SBP) to reduce dependence on manpower and scale down maintainance costs. SBP is a collection of work flows, design models and protocols that allows automation of the software engineering process.

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