July 11, 2012 Category : Careers & Training
BANGALORE: Ketan Jalan joined a top-tier IT company in July last year, immediately after his engineering degree. It's one year now, and he has not worked on a single project yet. He still goes to office every day. He went through a Java certification training. He's now registered for an Oracle course. But the training courses don't take much time. He spends most of his "working hours" Googling, playing or in the cafe. "It's boring," he says. But that may be understating the problem. It's also not good for his career, because he has no work experience to show for himself. And work experience is what matters most in salary increases and promotions.
There are many like Jalan, because IT companies failed to anticipate the sudden drop in demand on account of the global economic slowdown over the last year. Some employees are even allowed to stay at home. "It's making me mad. Now I'm scared I might be laid off," says another young techie who has been on what IT companies call "the bench" for close to five months now.
A bench, up to a point, is a necessary evil. Even though these employees don't earn anything for the company, there will inevitably be a bench formed by employees who would have just completed a project and would not have another to immediately work on. A bench is also needed—as a strategy—to quickly get a project going when the company receives an order (a client will not accept a situation where his work cannot be immediately implemented). It's like a manufacturing company that keeps investing to ensure there's always some excess factory capacity that can be used when an order suddenly flows in.
In normal times, IT companies have about 20% of their employee base on the bench. But as of the quarter ended March, the employee utilization rate (which is the opposite of the bench proportion) had fallen to about 67% for many, including Infosys, Wipro and MindTree — which means some 33% of their employees were on the bench. Considering that Infosys has 1.5 lakh employees, nearly 50,000 today are not earning any revenue for the company. For TCS and iGate, the utilization rate has dropped by about 4 percentage points over the last one year.
"There are companies with a bench size of up to 40% today,'' says an HR professional at a tier-1 IT firm who did not want to be named. Nirupama VG, MD of HR consultancy Ad Astra, says the bench size has gone up for many companies by 10 to 15 percentage points.
C Mahalingam, HR head at software product engineering services company Symphony Services, says the churn duration (the time an employee spends between completing one project and getting into another) used to be 45 to 60 days, but with opportunities dwindling, the duration is getting longer. "This opens up a huge resource management challenge and is the biggest concern for HR managers today,'' he says. Companies are reacting to the bench problem in multiple ways. Infosys Technologies has said it will delay the joining dates of the freshers it hired this year, some of them to as late as mid-2013. iGate has said it will delay the joining by one to two quarters. Many others are said to be taking similar measures. Most are reducing the extent of hiring they are doing this year. "Companies also handle benches by increasing the training period and using them for internal projects," says Navin Kumar, CEO of IT skills development firm iPrimed.