Future for working in the Digital World
Over the past year or so, there have been a series of news bytes around the challenges faced by the mid-tier (about 10-20 year experience) resources in the traditional IT setup. The challenges revolve around the industry’s ability to sustain the number of senior and experienced resources in the changing world and this is going to become more acute with more of them joining this category due to buoyancy.
Back in 1990s, the Industry origins were primarily attributed to three changes in the business world – Globalization, Shortage of Technology workforce and Cost arbitrage. This made the deployment of highly educated, computer literate programmers for the work in the western world in multiple commercial models. The Technology not only kept pace with the evolution of the people & business but ended up driving the changes in the industry. The productivity measurements moved from lines of code to outcome based implementations.
Software Engineers that the world needed to keep the industry moving doubled each year for many years. The Industry was happily running in auto pilot mode. One of the main reasons for auto-pilot was the linearization of the work i.e. more work more resources. Although there were exceptions to this general method, they were not significant enough to change the course. Operational Efficiencybecame the key benchmark to maintain the margins. An entire generation of management experts evolved with the skills and expertise on efficient management to keep the show running.
At the start of the second decade of the millennia, technology took next big leap. The advent of new age technologies of cloud, mobility and allied areas the paradigm for software development is getting significantly altered. Thelinearization was not strictly true anymore. Some experts predict that the number of resources needed and time required to develop the software will be cut down each by almost half, thus getting the same work done in quarter of the budget – and all of this is owing to the new technologies. Even if we take conservative estimates, it is highly likely that industry would need significantly less number of people to do the same work. Of course, we should account for the growth in the addressable market due to digitization of the business and more businesses coming up with innovative business models i.e. every enterprise will be a digital enterprise, however small or big.
With these changing times, Human Resources, Delivery & Sales, the three core functions of IT Industry need to rehash the operating frameworks.
So, will the resources that the industry needs in the new world be similar to the ones that the industry and academics have been churning out? Most likely, not. Re-skilling of existing resources and restructuring of the academic curriculum can take care of this change. The pace at which this was done in the late 90s gives enough credibility that this can be done.
But there is a more fundamental challenge. The industry has recruited a huge number of resources over the past couple of decades and they are now at mid-senior management. Although some of them will get reskilled, this is tough problem to solve given the sheer numbers. Looking at the statistics of the recruitment over the past two decades, most IT companies have got the bulge layer at the middle of the organization pyramid. The bulge layer contributes to about 25% to 35% of the wage bills, depending on the way the organization slices the structure.
Human Resources in the new age
Let us analyze the benefits & shortcomings of the bulge layer . The key pros are – Customer Relationship skills, Technical Architecture & Solutioning skills, Maturity, General Management skills, Stability & Longevity. The cons include – Re-skilling adaptability, Costs Structures, Age, Demographics, Hunger to win.
The challenge for organizations would be to see how the pros can be harnessed while minimizing the associated cons.
One of the options can be to move away from the Full-time employment framework to an Association framework. This is similar to the contracting framework that most organizations are used to but at a different scale and purpose. Most organizations use contractors for specialized jobs which are either needed by the customer or for themselves. They are usually carrying out niche work on one end of the spectrum and low end routine work on the other end. The organizations should move to the association framework where the regular work also be taken out of full time employment purview. These can include the functions like Project Management, Program Management, Test Specialists, Technical Architecture, Solution Design, Quality, Performance Engineering, Security Specialists, Technology Specialists, Domain Experts etc. These are typically done at the mid to senior management layer in the organizations. The organization could maintain a core group on these areas but most of the work could be done by specialists recruited on part time for the duration of the work. There will be people who would like to work on part time to do the same work and can employ their rest of the time for other gainful purposes to their liking. The organizations wage bill would come down helping the bottom line. The dilemma that the industry has on leveraging the strength & experience of the seasoned experts in the organization coupled with the call for cutting the employee remuneration costs could be addressed effectively.
Obviously, there would be challenges in the ways the organizations are structured and deep implications on the way the HR functions. The organization design, payout framework, engagement model and retention strategies would have to be redeveloped. These are certainly important but not insurmountable.
In the next article, we can discuss the framework with the next level implementation dynamics – the psychological aspects for the resource as well as the organizations, the Organization Development implications, the remuneration aspects, the social implications and obligatory give-backs to society.
IT companies are very keen to do business transformations for the customers, it time to try out themselves?
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