The Hindu Business Line : Measure for measure

Travel the world and make your dreams happen. And while you are at it, earn a great salary that grows anywhere between 15 per cent and 40 per cent every year. Do we even need to say what industry we are talking about? IT/BPO, for sure.

But while you were feeling happy for your cousin — or jealous of an acquaintance from college — who was given these salary hikes, do you know how much more these individuals have to work to justify salary hikes?

Or, do they? Do software companies have mechanisms at all to measure increase in productivity to match that last pay hike?

Is someone, with five years' experience in 2001 and continuing in the industry now, more productive now? Also, did a job profile, say project manager, in 2001 require an incumbent to do less work compared to today?

Answers to these could be significant, especially if the top few players in the IT services industry are together going to add about 1.5 lakh employees to their payroll in the next year, and given the general concerns about lack of quality manpower.

First off, a few chiefs of companies conceded that it was not scientifically possible to measure increase in productivity. A head of the human resources (HR) department in a relatively smaller company, on condition of anonymity, even said, "In most cases, the productivity of an employee hasn't risen in direct proportion to the increase in salary. But we do not have an option but to follow market compensation trends to retain people."

Metrics

The industry in general believes that it is not always possible to set up truly accurate metrics to measure increase in productivity. In some cases, those increases may be self-evident.

Says Ganesh Natarajan, deputy chairman and managing director, Zensar Technologies, "You can improve productivity by providing automated frameworks for process capture, analysis and software generation so that resources who were writing programs are now able to contribute as architects." He feels that the normal metric should be that the percentage improvement in team productivity every year through these methods should be at least two basis points higher than the percentage cost increase. And, does he see that in Zensar? Sure, he says, "We have instances in our development, migration and product engineering services where this is happening on a consistent basis."

Infosys Technologies too has metrics such as time taken to complete projects, function point analysis, sophistication of the work that is increasingly being done and the like. Though, concedes Mohandas Pai, director-HR at Infosys, in the case of complex and sophisticated work, it becomes difficult to measure productivity increases.

Some even reply emphatically in the negative when you suggest that it's rather difficult to measure such an increase. Hari T., senior vice-president, Satyam HR, says, that the amount of time spent, quality of work, expertise and knowledge delivered to the customer have a direct impact on revenue and hence productivity is easily measured.

In some instances, Satyam's projects maintain a separate portal customised to the customer with typical dashboards to measure productivity and progress that enables the customer and the project teams to share data, he says.

Fair returns

A smaller company, Xerago, which provides solutions for consumer services, feels that a mere quantification of `doing more' is an incorrect way of looking at pay-increase .

Explains Srinivas Chari, COO, Xerago, "Pay increase is an offshoot of job-breadth and content." Xerago uses EBIT/FTE (earnings before Interest and Taxes divided by number of employees, that is, Full-Time Equivalents) to assess productivity increase." He concedes that EBIT/FTE might not give them an indication of per FTE productivity increase. "But this gives us a sense of team-wise increase in productivity."

Balaji E., Chief Operating Officer, Ma Foi, an HR consulting company, dismisses the suggestion that pay hikes and increase in productivity might not go hand in hand. No one really doles out increments without ensuring a fair return to the organisation, is his take.

He explains that three factors drive salary hikes. One, for smaller companies, it is easy to benchmark salaries at different levels against the bigger players. That data is in public domain and you just need to better those offers. Two, as revenues grow, so should your wage bill. "If revenue grew at 75 per cent, a 22-24 per cent hike in salary is the norm." Third, people in the industry do progress to high value engagements. He says, "If a project manager was looking at a $500,000 project three years ago, he would now be responsible for a $1 million project."

What exactly do software folk get measured on? Balaji says parameters include turnaround time, defects in the software churned out, the amount of rework needed and, surely, customer ratings.

Satyam's Hari adds to the list, "Our tools of assessments, depending on the level of the associate, cover project performance, annual performance, collaborative skills and the like."

Easy-to-measure functions

The measurement metric Xerago uses is standard deliveries within the stipulated time. This because, Chari explains, "All deliveries have been standardised and form part of the individual Goal Sheet benchmarking. Measurement of IT deliveries is done on the basis of actual output turnaround in relation to the standard benchmark."

Some areas lend themselves more easily to measurement than others, especially at the lower levels. Application maintenance and development, BPO-related work and infrastructure management services tend to be easily measured.

Infosys' Pai says, "In BPO, transactions per hour per person per day and time to completion are measures commonly used. In development, function points per day, lines of code per hour can be used where the specs are clear."

iGate Global, a mid-sized software services player, feels that project managers do more today compared to say five years ago in many facets of their job. Mohan Shekar, chief delivery officer, says, "They now handle larger and more critical projects, manage and mentor more reportees, get involved in pre-sales, quality and recruitment."

Relevant benchmarks

Agrees V. Krishnamurthy, Head-HR at Sundaram Infotech Solutions. "We measure the Account Manager for bringing repeat business from the same customer, the Project Manager for timely delivery of high quality solutions and the Quality Assurance Manager for building good software engineering practices in project management.

Another small company doesn't use such metrics. Says Chandramohan T., director, BharatPlanet Consulting, a software services and products company, "We do not have a formal methodology for pay hikes. The thumb rule is, anyone with more than a year's experience gets at least Rs 10,000 per month. More than two years' experience gets at least Rs 20,000 per month."

He says a good chunk of his employees quit at around the end of the second year. Anyone with more than five years' experience gets to manage all his projects that are divided according to the technology domain. "Three years ago, these managers were developing code. Now they handle everything from client calls to delivery. Hikes in their salary are an indication of how much more free I have become over time."

Wage inflation over-hyped

But, looking at wage inflation as a thorny issue irks Infosys' Pai. "The industry has gone up the value chain and the spread of wages is very wide today. The biggest impact of the IT industry today in India is the fact that educated people are getting paid well," he says.

"Remember the time when a chartered accountant was being paid Rs 2,500 a month and an engineer Rs 3,000 per month after doing very well academically? Those days are long gone. Because of the IT industry there is willingness from the industry to pay a decent salary, recognise talent and now offer more jobs than there are qualified people to take them! This is a very good thing because it would motivate people to go in for higher education in larger numbers, pay reasonable fees, invest in education and create a more skilled workforce and a better economy."

Some experts feel that the problem needs to be tackled at two levels instead of at one. Says Hema Ravichandar, earlier chief of HR at Infosys and now running an HR advisory, "The productivity factor should be factored in, in two ways: at the individual level into the Key Performance Indicators (KPIs) that employees carry; at the organisational level into the manpower-planning model that the company employs. In both these, the productivity factor at a particular percentage should be woven in to ensure that input-output ratios continuously keep improving."

Also, technological advancements such as Integrated Development Environment (IDE), Automation Tools and Open Source Components have contributed to enhancing productivity of the project teams, Sekar says.

Productivity increases are also reflected, Shekar says, in the organisation's capability model. "This number has been consistently increasing at iGATE, year-on-year. It means we deliver more for less people compared to five years ago."

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