ITeS People Supply Chain Woes: Fixing What’s Broken

The key to success is to ensure that the right resources (skills) are available at the right place, right time, right cost while ensuring the right customer experience.


The Indian ITeS sector employs a little over 4 million people. That’s nearly 50% more than what the Indian Railways and the Armed Forces employ put together. Needless to say that people are at the core of any services business and it is no different for this industry. Arguably, it is more so for this industry than any other. In light of this awareness, the question is how to make the most of the greatest asset available at our disposal.

One approach, without sounding disparaging at all, is to consider human resources as analogous to raw materials in a manufacturing setup. The key to success is to ensure that the right resources (skills) are available at the right place, right time, right cost, while ensuring right customer experience. This is no different to a complex supply chain management process, core to the manufacturing industry. However, while there are many processes and systems to help organizations with their manufacturing supply chain, the investments in running a smooth people supply chain have been minuscule from technology companies. It is no surprise then that people related processes here are riddled with several challenges, such as:

1. Fulfillment delays, leading to loss of revenue: Projects usually take 6-12 weeks to start once sold. Due to the siloes between sales and resource management teams, firms are left scrambling to assemble people to work on projects. This leads to a potential loss of 3-5% in-year revenue and can get accentuated as requirements become more niche.

2. Just-in-time recruitment: There is a tendency to go-to-market and recruit just-in-time at a premium. External fulfillment hovers in the range of 40-60% for this industry and market premium for just-in-time hiring can create a dent of 10%+ over the existing salary base.

3. Swelling bench strength: The resources hired for specific projects find little opportunity to move around post-project ramp down and invariably land up on the bench. Given poor re-absorption due to a lack of fungible skillsets, these resources continue to stay unutilized for several weeks.

4. High attrition: Prolonged periods on the bench due to poor re-absorption is one of the key drivers of high attrition, which stands at around 20-30% for the industry. The replacement cost of an attrited employee can be as high as 1-1.5 times of the annual salary. These numbers start to become significant given the extent of hiring done by the industry.

5. Lack of systems: Ironically, the use of technology to drive a well-oiled and seamless employee journey has left a lot to be desired by the technology firms themselves. Several upcoming technologies in recruitment, onboarding, resource management have been piloted and tested but the implementation at scale is yet to be seen. Worse is that there are hardly any platform solutions that connect these modules to provide a seamless people supply chain experience.

As firms think about their transformation journeys, few things to consider are:

1. Build demand visibility: To reduce fulfillment times, demand signals need to be generated much in advance of requirement confirmation. For these signals to be actionable, they must have a high degree of accuracy and should be fairly granular in terms of demand requirements (site, skillsets, seniority), else there is a risk of wasted effort and bench buildup.

2. Fulfill internally, to the extent possible: These demand signals are then to be translated into proactive signals for the fulfillment, and focus needs to be on internal channels. Firms need to actively invest in institutionalizing rotation and reskilling programs to provide their people with exposure to a wide array of skills and project experience. This will drive resource fungibility across projects.

3. Break organizational silos: Be it for validating demand, confirming ramp-down of projects or identifying at-risk employees, the resource management teams require ongoing collaboration with functions like Sales, Operations, HR, Often this collaboration is done on a best-effort basis by leveraging informal employee networks. However, firms now need to actively think of instituting structural mechanisms, like cross-functional supply chain governance forums, to enforce this collaboration in a systematic manner.

4. Leverage technology as a critical enabler: As firms grow, a supply chain fraught with manual and judgment-based processes will become untenable. Technology will help replace these tasks with standardized execution at-scale. In addition to driving efficiency, technology will be paramount in providing by an integrated, seamless experience by stitching up disconnected systems and ensuring a single source of truth.

As we total up all the losses effected by the people supply chain issues, the industry is left glaring at a massive $5-7B in value foregone. It will be an understatement to say that the road ahead is daunting. However, those who take this challenge head-on can unlock 3-5% in incremental margins. The question that remains now is no longer “why” the need for transforming ITeS people supply chain, but is more a matter of “when”.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house


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