The Hindu Business Line : Using human capital for global leadership

"Information and knowledge are the thermonuclear competitive weapons of our time. Knowledge is more valuable and more powerful than natural resources, big factories or fat bankrolls." — Thomas A. Stewart, Intellectual Capital

Knowledge is the currency of the new millennium and no other nation comes close to representing this paradigm shift than India. Unlike other developing nations that have relied on their natural resources or physical labour, India has cleverly used the immense power of its human capital to leapfrog into the league of technologically advanced nations.

This is seen from the rise and recognition of India as a powerhouse of talent, which is primarily due to the IT and technical talent that the country has demonstrated to the world in the past two-and-a-half decades.

In this period, India's IT-ITeS industry has generated job opportunities for over 4.3 million people through direct and induced employment in allied sectors such as catering, transportation and real estate. India's case is unique because no other industry in any part of the world has been such a phenomenal success when measured against parameters such as growth in revenues and volume of employment created.

What are the factors for this astounding success? While the most cited factors have been low cost of labour and quality, the most crucial factor according to me is the ability of Indian software firms to transform and constantly align the skills of their workforce to meet the needs of a dynamic global market.

For instance, while it is true that India has one of the greatest reservoirs of talent, this in itself does not mean anything. Real progress of a nation will happen only if this talent is given an environment to bloom and systems are put in place that help employees unleash their true potential. The Indian software industry is perhaps the best example of how the potential of human capital can be maximised to achieve global leadership.

Building the foundation for growth

India's efforts in ensuring global standards in the initial years resonate with noted economist Paul Romer's `New Growth Theory'. The theory shows that economic growth does not arise just from adding more labour to capital, but from new and better ideas expressed as technological progress. For example, while abundant labour was the initial cause of India's rising software exports, the growth in software exports came because of quality, and improved productivity gains that Indian firms promised on a year-on-year basis.

If one looks back at the genesis of India's remarkable growth, you would notice that the initial foundation of the industry was built by the efforts of the pioneering firms who learnt how to focus the abundant programming talent of a huge workforce for creating potent solutions.

The success has also come because Indian firms have ensured that all their employees had a global mindset and followed global standards of excellence in quality, productivity and cost control.

Also equally important were initiatives from the Government such as setting up the IITs, and states such as Karnataka and Maharashtra giving prominence to introducing engineering colleges with private participation. All these initiatives contributed in building a comprehensive technical and tertiary infrastructure.

features of global Human Capital

Ensuring global HR best practices and weaving them effortlessly into the Indian ethos has been one of the key factors responsible for enhancing human capital. Some key best practices identified and adhered to by Indian IT companies, that have had a direct impact on the quality of human capital include:

Heavy investments in world-class training infrastructure

Excellence in recruitment

Building leadership skills through focused training programmes and tie-ups with renowned management institutions

Introducing a sense of ownership through methods such as employee stock options

Honesty and transparency of operations

Ensuring the highest level of corporate governance

Additionally, factors such as the lack of workplace hierarchy, setting up bipartisan feedback mechanisms and proactively seeking employee inputs for improving the organisation have all contributed to a higher level of trust, leading to a greater sense of responsibility.

For instance, the absence of gender bias has encouraged many women to enter the IT industry. According to a recent Nasscom study, the men-women ratio in the Indian software industry currently stands at 76:24, a ratio which is expected to be 65:35 this year . In the ITeS/BPO space, the percentage of women is significantly higher at 69 per cent.

All the above practices of enhancing human capital focused on an ultimate goal — enhancing performance at a global level. As a result of this unrelenting focus, most Indian firms developed abilities that allowed them to carve their own niche in the global IT services market that was once dominated by MNCs. These include abilities such as scaling up quickly in response to growth in demand, consistently enhancing the skills of knowledge assets to meet dynamic market needs and managing complex needs of global customers through a comprehensive governance model.

India's phenomenal rise as a nation is best summed up by a post on economic growth in Wikipedia that says, "Unlike physical capital, human capital has increasing rates of return. Therefore, overall there are constant returns to capital and economies never reach a steady state. Growth does not slow as capital accumulates, but the rate of growth depends on the types of capital a country invests in."

No nation best exemplifies the above quote than India, whose investments in world-class educational institutions, accompanied by constant efforts to enhance the value proposition of its human capital is paying huge dividends today.

With a market share of 65 per cent of the global industry in offshore IT and 46 per cent of the global BPO industry, India is a shining example of what the transformation of human capital can do for achieving and sustaining global leadership.

(The writer is Vice-President, HR Operations & People Development, Patni)

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