PuMAn 8LSCu8CL MAnACLMLn1

Case let 1

Trust them with knee-jerk reactions," said Vikram Koshy, CEO, Delta SoItware India, as he looked at
the quarterly report oI Top Line Securities, a well-known equity research Iirm. The Iirm had
announced a downgrade oI Delta, a company listed both on Indian boursesand the NASDAQ. The
reason? "One out oI every six development engineers in the company is likely to be benched during
the remaining part oI the year." Three analysts Irom Top Line had spent some time at Delta three
weeks ago. Koshy and his team had explained how benching was no diIIerent Irom the problems oI
excess inventory, idle time, and surplus capacity that Iirms in the manuIacturing sector Iace on a
regular basis, "Delta has witnessed a scorching pace oI 30 per cent growth during the last Iive years in
a row," Koshy had said, "What is happening is a corrective phase." But, evidently, the analysts were
unconvinced.
Why Bench?
Clients suddenly decide to cut back on IT spends Project mix gets skewed, aIIecting work allocation
Employee productivity is set to Iall, creating slack working conditions. High degree oI job
specialization leads to redundancy

What are the options?
Quickly cut costs in areas which are non-core look Ior learning`s Irom the manuIacturing sector Focus
on alternative markets like Europe and Japan Move into products, where margins are better. OI
course, the Top Line report went on to cite several other "signals," as it said: the rate oI annual hike in
salaries at Delta would come down to 5 per cent (Irom between 20 and 30 per cent last year); the
entry-level intake oI engineers Irom campuses in June 2001, would decline to 5 per cent (unlike the
traditional 30 per cent addition to manpower every year); and earnings Ior the next two years could
dip by between 10 and 12 per cent. And the loItiest oI them all: "The meltdown at Nasdaq is unlikely
to reverse in the near Iuture."
"Some oI the signals are no doubt valid. And ominous," said Koshy, addressing his A-Team, which
had assembled Ior the routine morning meeting. "But, clearly, everyone is reading too much into this
business oI benching. In Iact, benching is one oI the many options that our principals in the US have
been pursuing as part oI cutting costs right since September, 2000. They are also expanding the share
oI oII-shore jobs.
Five oI our principals have conIirmed that they would outsource more Irom Delta in India-which is
likely to hike their billings by about 30 per cent. At one level,this is an opportunity Ior us. At another,
oI course, I am not sure iI we should be jubilant, because they have asked Ior a 25-30 per cent cut in
billing rates. Our margins will take a hit, unless we cut costs and improve productivity." "Productivity
is clearly a matter oI priority now," said Vivek Varadan, Vice-President(Operations). "II you consider
benching as a non-earning mode, we do have large patches oI it at Delta.
As you are aware, it has not been easy to secure 70 per cent utilization oI our manpower, even in
normal times. I think we need to look at why we have 30 per cent bench beIore examining how to turn
it into an asset." "There are several reasons,"remarked Achyut Patwardhan, Vice-President (HR).
"And a lot oI it has to do with the nature oI our business, which is more project-driven than product-
driven.
When you are managing a number oI overseas and domestic projects simultaneously, as we do at
Delta, people tend to go on the bench. They wait, as they complete one project, and are assigned the
next. There are problems oI coordination between projects, related to the logistics oI moving people
and resources Irom one customer to another. In Iact, I am Iine-tuning our monthly manpower
utilization report to provide a breakup oI bench costs into Examination Paper Semester I: Human
Resource Management IIBM Institute oI Business Management speciIics-leave period, training
programmes, travel time, buIIers, acclimatization period et al." "It would be worthwhile Iollowing the
business model used by US principal Techno Inc," said Aveek Mohanty,Director (Finance). "The
company has a pipeline oI projects, but it does not manage project by project.
What it does is to slice each project into what it calls 'activities'. For example, communication
networking; user interIace development; scheduling oI processes are activities common to all projects.
People move Irom one project to another. It is somewhat like the Activity Based Costing. It throws up
the bench time straightaway, which helps us control costs and revenue better." "I also think we should
PuMAn 8LSCu8CL MAnACLMLn1
reduce our dependence on projects and move into products," said Praveen Kumar, Director
(Marketing). "That is where the opportunity Ior brand building lies. In Iact, now is the time to get our
technology guys involved in marketing. Multiskilling helps reduce the bench time." "Benching has an
analogy in the manuIacturing sector," said Girish Shahane, Vice-President (Services). "We could look
Ior learning's there. Many Iirms have adopted Just-In-Time (JIT) inventory as part oI eliminating idle
time. It would be worthwhile exploring the possibility oI JIT. But the real learning lies in
standardization oI work. It is linked to what Mohanty said about managing by activities." "At a
broader level, I see several other opportunities," said Koshy, "We can Iill in the space vacated by US
Iirms and move up the value chain. But beIore we do so,Delta should consolidate its position as the
premier outsourcing centre. Since there are only two ways in which we can generate revenue-sell
expertise or sell products-we should move towards a mix oI both.
Tie-ups with global majors will help. Now is the time to look beyond the US and strike alliances with
Iirms in Europe- and also Japan-as part oI developing new products Ior global markets."

":estions
1. Should benching be a matter oI concern at Delta?
2. What are the risks involved in moving Irom a project- centric mode to a mix oI projects and
products?



















PuMAn 8LSCu8CL MAnACLMLn1
CASELET-2

The contexts in which human resources are managed in today's organizations are constantly,
changing.No longer do Iirms utilize one set oI manuIacturing processes, employ a homogeneous
group oI loyal employees Ior long periods oI time or develop one set way oI structuring how work is
done and supervisory responsibility is assigned. Continuous changes
in who organizations employ and what these employees do require HR practices and systems that are
well conceived and eIIectively implemented to ensure high perIormance and continued success.
1. Automated technologies nowadays require more technically trained employees possessing
multiIarious skills to repair, adjust or improve existing processes. The Iirms can't expect these
employees (Gen X employees, possessing superior technical knowledge and skills, whose attitudes
and perceptions toward work are signiIicantly diIIerent Irom those oI their predecessor organizations:
like greater selI control, less interest in job security; no expectations oI long term employment; greater
participation urge in work activities, demanding opportunities Ior personal growth and creativity) to
stay on without attractive compensation packages and novel reward schemes.
2. Technology driven companies are led by project teams, possessing diverse skills, experience and
expertise. Flexible and dynamic organizational structures are needed to take care oI the expectations
oI managers, technicians and analysts who combine their skills, expertise and experience to meet
changing customer needs and competitive pressures.
3. Cost cutting eIIorts have led to the decimation oI unwanted layers in organizational hierarchy in
recent times. This, in turn, has brought in the problem oI managing plateau employees whose careers
seem to have been hit by the delivering process. Organizations are, thereIore, made to Iind alternative
career paths Ior such employees. Examination Paper Semester I: Human Resource Management IIBM
Institute oI Business Management
4. Both young and old workers, these days, have values and attitudes that stress less loyalty to the
company and more loyalty to oneselI and one's career than those shown by employees in the past,
Organizations, thereIore, have to devise appropriate HR policies and strategies so as to prevent the
Ilight oI talented employees

":estion
1. Discuss that technological breakthrough has brought a radical changes in HRM



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