Financial Daily from THE HINDU group of publications
Friday, Mar 29, 2002
Now, it's contract hiring of skills
BANGALORE, March 28
THE search for survival is leading to new equations between companies in the software sector. Small and large players are now finding a win-win strategy in symbiotic relationships.
Small IT companies have started to offer their workforce on project basis to the large ones in an arrangement reminiscent of the old body-shopping practice.
While small companies such as System Logic, Datacons Pvt Ltd, Intertec Communications and Nagaraj Technologies are lending a part of their workforce, the demand for contract professionals is mainly from the Indian arms of MNCs such as HP, Texas Instruments, Robert Bosch, Philips Software and companies such as Wipro, MindTree Consulting among others.
The arrangement works well for both parties. In the case of the small companies it is a question of survival and risk management. The system is not new, say industry analysts, but last year's slowdown has seen a sudden rise in the practice.
``This not only helps us to utilise the bench carefully, but also helps the company in the long-run as the deputed employees come back with a rich experience after working in the bigger companies,'' said Mr Ekanath Pai Kasturi, head, retail and distribution group of Datacons, a software solutions provider.
Datacons has a team of professionals managing the infrastructure services at Motorola India and six others have been deputed to Wipro for a specific project. The company has deputed nearly 30 of 225-strong workforce to various companies.
Wipro sources admitted that the company had been hiring professionals on contract basis from smaller firms for specific skill sets. About one per cent of the company's workforce was hired on contract, they added.
The big companies have the option to pick and choose the required skill sets for specific projects. ``Since the employee is on contract there are no tags attached nor any compulsion to retain them whenever the skills are not required,'' said Mr T.S. Ravichandar, CEO, Intertec Communications.
``They need not have to go through the trauma of lay-off,'' he said. Intertec, which is a partner company for Wipro, has about four of its professionals working for the latter on a CRM tool application for the telecom market. ``In this period of slowdown, companies don't want to miss the opportunities. They just want to go ahead and grab the projects that come their way. If you don't have sufficient and necessary skill sets, just go ahead and hire these skill sets on contract basis from other companies,'' said Mr S.K. Patil, Director, System Logic, talking of the large partners.
System Logic caters to companies such as LG Soft India, Robert Bosch, MindTree Consulting and Wipro. At any point in time, 50 of the company's 80 professionals on its rolls were on deputation to different companies, he said.
Some of the partner companies evaluate the professionals, take them on contract and sometimes absorb them. Others take on people for the duration of a project. For instance, if a large company bagged a project and had an early schedule to complete, it picked up contract professionals, Mr Patil said. These companies also have the right to hire the professionals who have been taken on contract. The project window is normally for a period of three months, and demand could be for any technology platform.
``We have been in this kind of a business right from the beginning,'' said Ms Jyothi of Nagaraj Technologies, a small software firm with nearly 100 employees, which mainly operates in the client-server, networking, system programming and Internet technology space.
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