Article: Year 2020 - A perspective on human capital challenge in IT industry

Talent Acquisition

Year 2020 - A perspective on human capital challenge in IT industry

In the coming times, IT industry might face a discrepancy in demand supply with mismatch in talent and jobs availability
Year 2020 - A perspective on human capital challenge in IT industry

How much will the world of IT industry change in another six years? Last six years were wonderful as the industry grew leaps and bounds. The HR function was busy hiring, training & managing people. If we go by the NASSCOM data, next six years wouldn't be much different in terms of the volume of business, but will it all be same for the HR function in IT, is something that remains uncertain. This article is an attempt to look at the organisational dynamics which would come to force in IT and their impact on HR function.

Although the world has been changing since early 2000s but one thing that didn't move much is the average service industry offshore rate for outsourcing, as salaries at the middle level in the IT sector almost quadrupled. Only 10% of the organisation had a 10L plus salary back then while now it is anywhere above 40%. The industry could absorb this, as the margins were and are still high and the icing on the pudding was Rupee-Dollar equation. However, both these factors may not stay intact for long.  

The last decade saw an outsourcing boom that gave the industry a number of employees with good project management experience. Majority of those people have now worked on repetitive old technologies & ironically many of these manager's aren’t the best of techno managers anymore. Industry didn't groom them that way and may be the decade of growth is to be blamed and no one else.

Though there are many other factors that would influence work in hand of HR in 2020, I have chosen to stick to above two, as these according to me would contribute significantly as compared to the others.

Competency & Compensation

Exponential industry growth in the years 06-07 & 09-10 infused a lot of talent at the bottom of the pyramid and consequently by the year 2020, the industry will have this talent group ready to be inducted as Project managers. Then the challenge would be that there may not be enough roles for all of them, as most of the project managers of today wouldn't have moved up the role. An ideal progression for today's project manager would be to become delivery manager, but the million dollar question would be, what would today's delivery manger do then? Even if industry grows at current rates, the supply would be much more than the demand. Reason for this phenomenon is that the majority of growth is being contributed by the same account and as such not many delivery manager roles open up. Adding to that spectrum is the oversupply, due to spiked up entry level hiring during 2006-10 period. But the enormity in 2020 would be huge than what is happening today and would make the world a lot different. 

Theoretically, Team Lead and Project Manager are two different roles, but the gap has now been narrowing due to cost pressures. In most cases, Team Leads are pseudo Project Managers for small projects. This has led to a kind of osmosis amongst levels thereby diluting the line between the levels. This is happening across Team Lead, Project Manager and Delivery manager levels.

What this also implies is, that on an average annual salary growth of 7%, the industry would have two group of people with same competencies of project management/delivery management, but at strikingly different compensation. One at 30-40% more compensation than other, with very less clarity on their career progression and skill differentiation.

Are we heading towards a Golden hand shake?

A relevant question here would be, how would this effect delivery managers and project managers of 2020? This would affect the project managers more than the delivery managers because, “client relationships“ is the main competency of delivery managers and that would make them riskier to be disturbed for the organisation.

If that is the case, can we compare the scenario at project manager level to that of shop floor workers late 90s. The issue then, was same job, two types of people & two kind of salaries; this is not exactly the case here because project managers goes through an annual ritual of performance management and bottom 3-5% goes out of the system.

The issue here is also different, as same role is performed by people across three grades and 5% performance exit means there is good 95% left.  Moreover, we are talking about three employee grades at some 15 compensation points and this disproportion could be enormous for an organisation with more than 100,000 employees.

The only factor which could defuse this complexity could be dependent on 

  • Rupee dollar relationship; and
  • Kind of work which our industry can attract in next 2-3 years.

But if the scenario remains the same as of today, then we are looking at a social phenomenon than an industry one. This might lead to a golden handshake without gold because contract termination is much easier an exercise for this group, unlike unionised cadre of manufacturing. This could have a huge social impact as society, family and employees themselves aren't prepared for this possibility. Small companies may not see this development for themselves as this challenge of oversupply of people and career void amongst middle level would only be seen amongst matured large organisations.

Though the world may not end for these employees, as they can calibrate their expectations in accordance to the needs of domestic IT projects and get themselves placed. Though the salaries there could be dearer but the challenges and learnings would compensate for the same. 

A positive output to this development would be, more seasoned hands for an IT revolution in India. This would indirectly equip India to maintain and score over our western peers in terms of growth for another couple of decades.

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Topics: Talent Acquisition, #Trends, #ChangeManagement

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