SOLUTION PROVIDER HR SURVEY: To Hire Or Retain?

Methodology

A total of 100 top solutions providers from the DQ Channels
Silver Club were considered for the survey. Only 54 responses were considered
for the survey based on the uniformity of the size and popularity of the
companies. We asked the HR managers of these companies to provide us with
exhaustive information. Based on the information collected, the data was
analyzed using the weighted averages. The findings are here:

The right people

Getting the right people for the right job is the most common
challenge HR managers face in every industry. According to the results of the DQ
Channels HR Survey, the same concern figured on the top for most solutions
providers. However, what makes this finding frightening is the business model
these solution providers follow. Only 30% of the employees in a typical
solutions provider setup are technical staff. This 30% also makes the backbone
of the entire organization because a typical SP's main business activities are
technical in nature.

DQ Channels asked SPs to rank the biggest HR concern in their
organization. We received varied answers. However, on the top was
"Recruitment issue" as the top HR concern with an average percentage
of 27%. This was followed by 'Training' and 'Attrition' as the next
biggest concern in the HR department.

Relatively, 'Poaching from competitor companies' was not
really a big issue for many of the companies surveyed. Some of the respondent
said that 'motivation' was also an issue for the HR department.

Talking about 'Recruitment issues', HR managers feel that
people are in available in abundance. But getting the right people with the
right set of

qualification is a problem. When companies fail to get the right people, it
leads to the other HR concerns such as - training and attrition.

One issue leads to another

Absence of sufficient qualification required for the job puts
extra efforts on the HR department or the colleagues to train the new
appointees. Many companies do take the pain of training new recruits by
conducting induction training and other regular workshops. However, the best
training one can get is on the job.

Some companies give so much importance to the 'training'
part that it turns out to be the best company for new comers to learn.
"Such companies eventually become a training ground for new recruits,"
laughs a HR manager. "They come and learn and leave the company looking for
better opportunities," he adds.

A good training schedule is important, but simultaneously,
all other HR concerns are equally important. Companies should learn to not just
appoint and train people, but retain them through smart ways.

Why do people leave?

People leave because of many reasons. It could be the salary
appreciation structure, interpersonal relations, the company's status in the
market, receiving better offers, or it could be just some personal reason.

HR managers told DQ Channels that the main reason for
employees leaving is the same as in any other industry — for 'Better
opportunities'. Respondents felt employees change jobs looking for greener
pastures. At the same time, the respondents ranked 'Salary issues' very
close to the above parameter, as a reason for leaving company.

For majority of the respondents 'job satisfaction' ranked
third as a reason for leaving the job. The fourth-most serious HR concern for
any HR manager in a solution provider outfit is 'Performance of the employee'.

'Working abroad' as a reason for leaving an organization
company got the lowest ranking. Generally, people tend to believe that people
working in the field of information technology always target the United States
as dream destination for work. However, in the solutions provider community not
many have looked at the option of opportunities abroad. It is probably because
of the predominance of hardware engineers in the field. Indian hardware
engineers are not as popular as the software professionals in the foreign

markets.

Recruitment source

DQ Channels asked members of the solutions provider community
to rank the best sources of recruitment. The best recruitment sources according
to majority of the respondents were 'Referrals'. Yes, referrals or
word-of-mouth is no doubt the best source of recruitment. This also saves a lot
of time energy spent in testing a new candidate's caliber. "There is an
element of trust involved. When a person is sent to us by a person known to us
and who knows our requirement, he or she is the best we can get," said one
HR manager.

The next best source for recruitment is consulting agencies,
job sites and print advertisements in that order. Surprisingly, very few
responded with 'Campus recruitment' as an alternative source for getting
people.

 

Attrition issue

Pay cheques alone are not enough to retain employees.
Management also needs to consider other aspects like secure career, benefits,
perks and communication. While the average attrition rate of solution providers
surveyed stood at 12%, there were companies with attrition rate as high as 25%.
The lowest was at 3%.

In a solution providing company, technical staff plays a key
role. If this set of people is not handled smartly, losing them could be a big
loss to the company. The survey found that on an average 16% of the technical
staff leave every year. However, there were companies with 1% attrition of
technical staff in the survey. The highest was 30%.

As a means to tackle attrition, some companies have tried
getting the employees to sign a bond at the time of recruitment. The practice of
getting employees to sign bonds is very old. "Such practice has usually led
to waste of time and energy on legal battles, resulting in nothing," says
an HR expert. While this might have worked very well for some, most companies
surveyed said a big 'No' to Bonds. Only 15% stated 'Yes' to such
practice.

There are better ways to tackle attrition. "How about
focusing on retention by making the workplace an enjoyable place and treating
applicants and employees in the same way as one treats customers?" asks a
CEO.

Salary structure

While the majority of the respondents felt employees leave
for the perceived better offers, it also meant better salary. Remember that
these are people for whom salary alone is not the reason for leaving.

But, salary also becomes an issue for many and plays a big
role in employee retention. Just paying a good and hefty salary may not work all
the time. What is more important is to have a good appraisal process where in
performing employees can be rewarded. Salary hikes after measuring performance
justifies employee satisfaction. Defining the measurable is equally important.

According to the HR survey 74% of the SPs surveyed had a
different salary structure for technical staff. The rest did not differentiate
between the two. The survey also found that the average salary hike SPs give to
its employee is around 18% per annum. For the technical staff it is around 21%.

However, the survey found that many companies did not have a
practice of conducting regular work or salary appraisal or even salary
revisions. In many cases salaries are hiked only when the employee are ready to
leave on a disgruntled note.

Young & qualified world

57% of employees in the companies surveyed were in the age
group of 25 to 35 years, and 27% were below 25 years of age. Besides, a large
chunk of employees had decent qualification to justify their job roles. Around
40% were graduates followed by 26% of the staff having a BE or BTech
qualification. This shows that the human resource pool is manned by a strong set
of qualified and young people.

But, are the regular academic qualifications good enough for
the job they are supposed to
do? Solutions providers are in
the business of systems integration, AMC, and many other technical works. A mere
graduation or a BTech is not enough for these professionals to excel in the new
world of information technology.

However, these are the right set of people who can be groomed
to adopt new skills with proper guidance and training. Solutions providers know
this and train employees to various technical skills required by various vendor.
These are in the form of vendor certifications.

Certifications

A company that spends more time and money in certification
can expect to do well in the market. DQ Channels through this survey tried to
find out how many solutions providers take serious interest in getting their
employees certified. The results are interesting: About 30% of the tech staff
employed in a typical SP firm have some certification. Of the 75% who actually
spends on certification, the average is Rs 12 lakh per annum.

Conclusion

Though most of HR survey findings indicate that salary
structure and attrition rate in SP organizations is at par with IT industry, the
issue in front of SPs is to retain in-demand technology professionals who leave
companies (SPs) for better avenues. Rewarding people by giving additional
incentives and making them feel important is the need of the hour.

NELSON JOHNY


with inputs from Zia Askari in New Delhi, S Gopikrishna in Chennai, Subbalakshmi
BM in Bangalore and Piyali Guha in Kolkata