Wednesday, March 04, 2009

Open Letter to IT companies

Dear Indian IT companies,

I have been reading everywhere that you are making your employees work longer than usual. I read that employees may need to work on weekends, or work on an average each day for 9 hours or more?

Just what exactly are you trying to achieve is beyond me. As far as I know, we are entering some sort of a slowdown. All around me, factories are doing exactly the reverse. They are working lesser. If they went your way, they would be producing more cars (or cement or shoes). But they arent, because not everybody is interested in buying a car (or cement or new shoes) during a recession.

So, what is different about your business? I have never known a restaurant that gets more customers simply because its cooks work an extra hour each day.

What happened to paradigms of smarter, efficient and cutting down wasteful labour? And if employees work longer, surely, you will have to get in more work? Just who is waiting to give you more work in these troubled times?

And not one, almost all companies in one great migratory bird type of reaction have decided that South is the way to go.

Heres a thought. How about thinking contrarian? Reduce the week to 4 days - save money on cost, transport, power and associated infrastructure? Or give a summer vacation week off to employees on a rotation basis, so that they go home and enjoy time with their families? Sure, don't pay them for it. They will only be too happy about it - atleast they know their jobs are secure, by and large.

Or, getting your employees to work from home one day a week on a rotation basis? That will free up atleast one building or a floor occupancy.

Or if you are a start up, simply give up your office. Whoever said work has to be done by travelling to a central location each day? Meet once a month at an offsite - the rest can be handled virtually. Don't trust your employees? Oh come on. Change your hiring process and grow up.

Heres another thought. Encourage them to come up with their own ideas to float a business. For those who qualify, give them your office space free for incubation for 3 months. Charge them for using infrastructure if they wish to continue after 3 -6 months. If it works, great, take a share in it, else take the employee back.

Downturns make people do strange things. Sometimes, it helps them think. Use this downturn to earn goodwill amongst your employees. They will remember when it is back to boom times.

I am a fan of Indian IT- been so for a long time. The reason why your model evolved was partly because your staff was very smart, but also because you figured out that work need not be done at the place where it is created - and thus was created offshoring and an entirel business model. I am hoping you use this downturn to turn some commonly accepted practices upside down...


Onkar Joshi said...

I'd guess that the point of increasing the working hours is that the number of employees needed can then be reduced.

Seems to make sense.

Factories are doing the reverse because they have much stronger unions and labour laws working for them that make layoffs difficult compared to what is possible in IT.

Also, workers in factories would usually be need to be paid more if they are working longer due to the measurable nature of the quantity of work they do. But it's not so in IT.

Neelakantan said...

Yes Onkar, I agree, but why does everybody have to think that laying off employees is the only way to go?

Onkar Joshi said...

Surely they don't think of it as the only way to go.

Cuts in variable pay, subsidies for transport and meals, reduced hiring, pay cuts, they are all happening at most work places aren't they?

Just that layoffs affect people the most. Especially in India where being pink slipped is in general considered loss of face as well.

Some companies seem to believe that not having layoffs but introducing cuts overall will ensure better goodwill with current and future employees. Others believe in using layoffs to keep employees who remain unaffected and raising the bar of quality at the workplace as a side effect. I do believe that it greatly lowers morale at the workplace though.

Neelakantan said...

Yes, again, great points.

I was referring to your point on how working hours are being lengthened in preparation for an eventual layoff. I mean, laying off is the easiest thing to do, but remember that a layoff first points to problems with your own hiring, then, who would you layoff first? ha :)

I just wish that they also implemented some of these "different" ideas...

sameer said...

Well, if u think of what mosr services outfits have been selling ("billed hours") it does start to make sense. More billed hours in shorter lifecycle projects.
As things move to fixed cost, it'll get worse.
This is where the fat-cat salaries we've been wanting - and double digit hikes for a decade - will start to tell on our lives...

saurabh said...

IMO, the main difference is that IT is not a "manufacturing" based industry. So, more individual man hours doesn't imply increased production. It only leads to fewer men required to do a task, and in some cases, completing tasks before estimated deadlines, hence doing better than your competitors.

Neelakantan said...

True. Then, if you finish your work faster as you point out, is there tons of new work enough to justify the teams working longer hours? Which sort to agrees with Onkars point about it being one big preparation...

Santhosh P said...

While agreeing to others who commented that in services business, it's debatable whether you really gain anything by increasing working hours (I think it does in some cases, but don't ask me about the quality of stuff that comes out), one thing that Neelakantan points out - "Encourage them to come up with their own ideas to float a business" is exactly that they should be doing, if they want to move from 'resourcing-centers' to real centers of excellencies in information technology.

harry said...

No this is true i am doing job in IT company but there is nothing like that


Anonymous said...

There are a couple of facts that we need to understand

1. Most projects are run on extremely tight deadlines. Statistics tell us 75% of IT projects are delayed

2. Most employees especially at lower levels work for significantly longer than 9 hours.

Now in T&M project (Time and Materials) the reason why they mention 9 hours is so that they can bill additional hours to the client.

In a Fixed bid project, they are unlikely to bill extra to the client, but usually fixed bid projects have the tightest time lines. Therefore forcing people to work extra hours might help slippages.

Moreover, if this continues long enough, then this becomes standard practice. If the times improve, you think the hours will be rolled back?

In addition, these times are when IT companies are likely to milk as much as they can from their employees as they usually wont have other options.

About companies not having cash, check their annual statements. They are sitting on a pile of cash.

If the govt decides to tax the IT companies (as they should), then expect even worse.

Sudipta Chatterjee said...

While I agree that increasing work hours by force and slave-driving them to do more work is going to do exactly the opposite in terms of employee morale and perhaps even productivity, I think your reasoning is flawed in comparing the IT jobs in India to restaurants and car-manufacturers.

Most of the jobs in software companies are either software maintenance or some software development. These are not innovative and indigenous software design and development (an area in which we sorely lack in India), but rather doing someone else's work at home. To use your restaurant analogy, there are no new cuisines being made.

The budgets for these IT projects are already in place, and the companies are just trying to deliver them in time. Again, to use the restaurant analogy, it is like there are fifteen customers who have already placed orders (and pre-paid a percent) and are waiting in the dining area, while your IT employees are cooking whatever they ordered, in time, with proper quality checks.

Neelakantan said...

I understand the flaw in the factory and restaurant analogy, but the common factor is the "lack of new work". I understand people stretching for short term delivery, but to increase working hours in general there has to be either a reduction in workforce or an increase in work. In the medium term work is not going to come in since companies the world over are seeing demand shrinkage and budget reductions. Make what you will of that...

Rams said...

So long as head-count and time-spent based project billing continues, there's going to be no respite. The real problem is not in India, but in the US, where the bosses obviously believe that it's some kind of manufacturing assembly line activity. Otherwise they wouldn't agree to this kind of billing. So, Yes while the the Indian companies are the easy choice for criticism, the real cause of the problem is the management in American companies.

Ram said...

A very nice post Neelakantan - I agree to all the points. The Indian IT company should think about bringing some new ideas - the old ghostly tricks/plans should not live longer and if it lives will kill the human inside us.

Kiran said...

Hi Neelakantan,

I landed here from DesiPundit. This is an excellent post. Although there is merit in the comments of Onkar, d.kiran and others, at the end of the day I agree with your views.

This is the time to think out of the box. You have proved that there are a whole bunch of seemingly simple ideas which companies can resort to - rather than downsizing and putting extra burden on those employees who still have the job.

Sadly, right now, the companies are calling the shots. So employees have no choice but to toe their line. Like you mentioned, this is an opportunity for companies to earn goodwill - they can definitely use it when boom time is back. Question is - how many companies really look at it that way?

Final point - regarding the comment about the companies having or not having cash, I think you can broadly categorize the companies which are downsizing into three categories:

1) Loss-making companies (ok - maybe these are justified in laying off; since survival comes first)

2) Companies which have seen a drop in profit (poor things - their profit came down from a few hundreds of billion dollars to only a paltry few tens of billion dollars). Are they justified in laying off? Debatable

3) Companies whose profit actually increased, but did not meet their targets (last year my profit was a zillion dollars, this year its 10 zillion, but it dint quite reach the one gazillion dollars which our investors were expecting - so downsize). IMHO, this is in bad taste - given the current economic situation.