CASE – 1 HELPAGE INDIA
The developments in medical sciences—the lowering of mortality rates and the increase in life expectancy—have ironically led to a situation where there are increasingly, a larger number of aged people in the society. The situation in most countries of the world is that the number of ageing people is increasing. India too, like other developing countries, experiences a rapid ageing of the population, with an estimated 80 million aged people. Almost eight out of ten of these aged people live in rural areas.
The challenges that the elderly people in the society face are many. For instance, a report in the Indian context indicates the following challenges:
- 90% of senior citizens receive no social security or medical cared.
- 73% of senior citizens are illiterate and can only earn a livelihood through physical labour, which is possible only if they are healthy in their old age.
- 80% of senior citizens live in rural areas with inadequate or inaccessible medical facilities; many are unable to access the medical facilities because of reduced mobility in the old age.
- 55% of women over the age of 60 are widows with no means of support.
The elderly people, or senior citizens, are the fastest growing segment of the Indian society. By 2025, the population of the elderly is expected to reach 177 million.
Unlike many developed countries, India does not have an effective security net for the elderly people. There have been sporadic attempts by governments at the central and state levels to pay old-age pensions, but like most government schemes, there is a lot of leakage of funds and inefficiency. There is also a lack of post-retirement avenues for re-employment.
Socio-economic developments such as urbanisation, modernisation, and globalisation have impacted the economic structure and led to an erosion of societal values and the weakening of social institutions such as the joint family. The changing modes of society have created a chasm between generations. The intergenerational differences have created a situation where the younger people are involved in education, career building and establishing themselves in life, ending up ignoring the needs of the elderly among them. The older generation is caught between a society which cares little for them and the absence of social security, leading them to a situation where they are left to fend for themselves. It is in this context that institutions such as HelpAge India play a positive role in society.
HelpAge India, established in 1978, is a secular, not-for-profit, non-governmental organisation, registered under the Societies Registration Act of 1860. Its mission is stated as: ‘to work for the cause and care of the disadvantaged older persons and to improve the quality of life’. The three core values that guide HelpAge India’s work are rights, relief and resources. HelpAge India is one of the founder-members of HelpAge International, a body of 51 nations representing the cause of the elderly at the United Nations. It is also a member of the International Federation on Ageing.
The organisation of HelpAge India consists of a head office at New Delhi, with four regional and thirty-three area offices situated all over India. The governing body of the organisation consists of ten distinguished people from different walks of life. Besides the governing body, there are three committees: the operations committee, the business development committee, and the audit committee. The CEO, Mr Mathew Cherian oversees the planning and implementation of policies and programmes, with the support of five directors. The regional directors are responsible for their own regions. The program division at the head office chooses the partner agencies to provide the services to the elderly people.
HelpAge India raises resources to perform three types of functions:
- Advocacy about policies for the elderly persons with the national and local governments
- Creating awareness in society about the concerns of the aged and promote better understanding of ageing issues
- Help the elderly persons become aware of their own rights so that they get their due and are able to play an active role in society
The major programmes undertaken by HelpAge India include mobile medicare units, ophthalmic care for performing cataract surgeries, Adopt-a-Gran, support to old-age homes, day care centres, income generation and disaster relief.
The business model of HelpAge India is based on revenue generation through grants and donations from International and national sources. Nearly half of the donations come from International donors. About a fifth of the donors are individuals. The sources of contributions come from fund-raising activities that include direct mail, school fund-raising, corporate fund-raising, sale of greeting cards, acting as corporate agent for insurance, organising events and establishing a shop-for-a-cause that sells gifts made by disadvantage people.
A review on the activities of HelpAge India enumerates its strong points as below:
- Wide Reach and Impact HelpAge India has been able to impact the lives of a large number of elderly people and their families by adopting a holistic approach that provides immediate relief as well as long-term sustainable improvement.
- Effective Partnerships in Development HelpAge India has evolved as a development support agency through creating partner agencies, that is funded to implement the projects.
- High Degree of Charitable Commitment Typically non-profit organisations spend a lot of on overhead and administrative costs. But HelpAge India is able to put nearly eighty-five per cent of the funds towards actual project implementation.
- Focus on Efficiency and Transparency The partner agencies are chosen carefully and monitored thoroughly. This results in increased efficiency and low overheads. Project implementation through partnerships increases efficiency and cuts down on overhead costs.
- Quality of Management The management quality of HelpAge India is good and there are a lot of committed people. new employees are also trained to be sensitive to the mission of the organisation.
With a wide spread of activities and being a non-governmental organisation have limited funding, HelpAge India has adopted modern means of information technology and networking. Most of the HelpAge executives work in the field and have no direct access to the office network. They have to use e-mail in order to maintain contact with their regional or area offices. They use cyber-cafés or handheld devices for sending and receiving e-mails. HelpAge has installed a secure connection at an initial cost of Rs. 4 lakh and annual upgradation cost of Rs. 75,000 to access e-mail from anywhere, with a high level of security and protection of data and contents.
The nature of non-profit organisations demands certain requirements. Among these, transparency of operations and funds management is a major one. There are many NGOs that are accused or suspected of misappropriating funds for personal benefit. HelpAge India is conscious of this fact and gives high priority to information disclosure. The audited financial statements and the annual report are available on its website. The financial statements give a detailed account of the expenditure on individual projects. The expenses on travel and salaries of its employees and CEO are also mentioned. The individual donors are provided information regarding the use of the funds donated by them.
The functional approach at HelpAge India consists of developing projects based on the assessment of the needs of its target community rather than on implementing them directly. The implementation takes place through the partner agencies. Rather than outright grants, it supports income generation projects for the elderly people. The success of implementation critically depends on the identification and appointment of partner agencies. The officers of HelpAge India physically inspect the proposed agencies and check on their management to ensure that they are not family-run-set-ups established for personal gains. HelpAge India works presently, for instance, about 150 charitable eye hospitals that act as partner agencies for the ophthalmic care programme.
HelpAge India with its slogan of ‘fighting isolation, poverty and neglect’ moves on its mission of providing ‘equal rights, dignity for elders’. It foresees its future activities in the area of rights based advocacy for a better life for the elderly people by bringing them into the mainstream of society rather than being marginalised to the fringes.
1. In your opinion, what is the distinctive competence of HelpAge India?
2. Prepare a strategic advantage profile for HelpAge India.
CASE – 2 INCORPORATING CORPORATE SOCIAL RESPONSIBILITY INTO STRATEGY AT THE TATA GROUP
‘In a free enterprise, the community is not just another stakeholder in business, but is in fact, the very purpose of its existence.’ This is a statement of the founder of the Tata group of companies, Jamsetji N Tata. The thinking behind the statement probably drives the corporate social responsibility initiatives at the Tata group of companies.
The Tata group describes itself as ‘India’s oldest, largest and most respected business conglomerates’, a depiction that seems to be quite justified. The group’s businesses operate globally through 98 companies—27 of them publicly-listed—in seven business sectors. There are nearly 2,90,000 employees working in these companies that have about 3 million shareholders. The group’s turnover in 2006-2007 was about Rs. 130,000 crore.
There are five core values that guide the Tata group’s business decisions: integrity, understanding, excellence, unity and responsibility. The value of integrity means conducting business fairly, honestly and with transparency. Understanding involves caring, showing respect, compassion and humanity for colleagues, customers and community. Excellence denotes striving constantly to achieve high standards in work and quality. Unity implies building strong relationships with colleagues, customers and business partners. Responsibility signifies giving back to the community and society.
The tradition of CSR is embedded in the history of the Tata group. The J.N. Tata Endowment Scheme was established in 1892. Over the years, individual family members have created a constellation of trusts and endowments that contribute to a wide range of CSR activities. In the words of J.J. Irani, ex-managing director of Tata Steel: ‘Some people consider social responsibility as an additional cost; we don’t. We see it as part of an essential cost of business, as much as land, power, raw materials and employees.’ This is seen in the quantum of funding that channeled into CSR. The Tata group contributes nearly 30 per cent of its profit after tax, which is an unusually high figure, when other companies or business groups may take pride in putting in just one per cent of profits into CSR. The high social investment come from the Tata trusts that have a controlling interest in the holding company, Tata Sons. This ensures that the dividends are paid out are directed to CSR, making the Tata group companies unique in ensuring that personal wealth is converted into social capital.
The Tata group has created a formal structure to direct CSR activities. The Tata Council for Community initiatives is a centralised agency consisting of the Tata companies’ CEOs, charged with the responsibility of directing and coordinating the CSR activities across the group. It is headed by a member of the group corporate centre, one of the two top governance bodies, the other being the group executive office. This is an indication of the high priority accorded by the Tata group to CSR. In order to create accountability, the Tata group has a distinctive evaluation system called the Tata Index for Sustainable Human Development. The Index is a set of guidelines for Tata companies looking to fulfill their social responsibilities. In the words of Anant G. Nadkarni, vice-president, group corporate sustainability, ‘We have adopted a business model to drive social responsibility effort within the group because that way, you ensure a huge network. The Index helps structure our efforts and quantify their effect on the communities and people are aimed at.’
Of significance is the fact that the Tata Index for Sustainable Human Development is build around the Tata Business Excellence Model that drives business decisions of the group companies. One of the several areas of business performance in the model is of governance and social responsibility, indicating the strategic priority given to this issue by the Tata group. Typically, business organisations have considered social responsibility as far removed from their mainline business activities. Not so at the Tata group where CSR is a key element in the business model. It is the responsibility of every company in the group to make CSR a component of its strategic plan.
Despite having a centralised network and structural arrangements, the individual Tata companies are autonomous to choose whatever CSR initiatives suit the requirements of the communities they work with. The strategy that each company evolves is required to be focussed on the needs of the communities in which the company works in. there is a conscious effort to match the strengths and competencies of the company to the developmental needs of the communities being served. Thus, the company is left free to determine the scope of its CSR initiatives, be it in the area of arts and culture, civic amenities, education, environment, health or infrastructure. For instance, the Tata Steel Rural Development Society works at Tata Steel for the rural communities around the operational units, while the Tata Chemicals. Voltas for Women is an exclusively female society consisting of female employees and wives of employees, who work on health and education issues for women. The Tata family trusts consists of the Sir Dorabji Trust and Sir Ratan Tata Trust besides the J. N. Tata Endowment. Some of the prominent Tata-funded institutions are the Indian Institute of Science, Tata Institute for Fundamental Research and Tata Institute of Social Sciences.
1. Collect evidence from the case to support the argument that social responsiveness at the Tata group is closely aligned with its strategic management.
2. How would you respond to critic who says that the Tata group engages in CSR activities to enhance the reputation of the Tata brand and thereby, benefit economically from its social responsibility initiatives?
CASE – 3 A PEEP INTO FUNCTIONAL AND OPERATIONAL IMPLEMENTATION AT KRIBHCO
Krishak Bharati Cooperative Limited (KRIBHCO) is a cooperative society set up for fertiliser manufacturing, registered under the Multi-State Cooperative Societies Act, 1985. It was promoted by the Government of India, Indian Farmers Fertilisers Cooperative Development Corporation and other agricultural cooperative societies spread all over the country. It has more than 6000 members who have contributed nearly Rs. 400 crore as capital. KRIBHCO basically operates in the three business areas of bio-fertilisers, urea and seeds. Its fertiliser complex is located at Hazira near Surat in Gujarat, seed plants at various locations in eight states of India and service centres called Krishak Bharati Seva Kendra at various places in the country. KRIBHCO has equity participation in fertiliser companies within India and in one company in Oman. The cooperative is managed by a board of directors, senior management headed by a managing director and functional heads in the areas of operations, finance, marketing, and vigilance.
The vision of KRIBHCO is stated as: ‘We want to be a world class organisation that represents the farmer community and maximises returns to them through specialisation in agricultural inputs and products and other diversified businesses that maximise stakeholder value.’ The mission is ‘to act as a catalyst to agricultural and rural development by selecting, financing and managing projects that are both socially desirable and commercially profitable’. The objectives are: to increase the urea installed capacity while maintaining its market share, to ensure optimum utilisation of existing plant and machinery and to diversify into other core sectors like power, LNG terminal/port, chemicals etc.
The equity capital has been subscribed by the Government of India (67.6%) and other cooperative societies (32.4%). Its net worth is Rs. 2288 crore, constituting equity of Rs. 396 crore and reserves of Rs. 1892 crore. It earned a post-tax profit of Rs. 193 crore in 2006-2007 and has declared a dividend of 20% for the last three years. The Cooperative has the distinction of paying the highest dividend and maximum taxes in the cooperative sector in India.
KRIBHCO markets its fertilizers through an extensive marketing network spread over 16 states of India, through cooperative and institutional agencies and through its own outlets. The cooperative agencies in its marketing network are located at different levels such as apex, district and taluka levels and village-level societies. The institutional agencies typically involved are the agro-industries corporations and land reclamation agencies.
KRIBHCO is an ISO-9001: 2000 and ISO-14001 certified company. It produced and dispatched more than 34 lakh tonnes of urea in 2006-2007. Various functions of bagging, handling and loading in the product handling plant are performed through manual product handling processes as well as through mechanised bagging machines. Mechanical improvements have also been affected for smooth transfer and conveying of bags in the bagging plant. These efforts have resulted in minimising product loss, avoiding shortfall or excess quantities, minimising the loading time and reducing the specific bag consumption.
KRIBHCO has formal policies in the areas of energy, environment, quality and safety. It has declared its energy policy and has volunteered its commitment towards energy conservation. The energy policy is aimed at an optimum utilisation of the various forms of energy in a cost-effective manner to conserve energy resources. The Cooperative has set up a quality policy and an environment policy, which have been framed after integrating the energy saving objectives and goals as well. The safety policy of the Cooperative emphasises on the importance of safety and to an adherence to safe practices. A safety department performs the functions of ensuring compliance with safety standards.
KRIBHCO has a modest human resource development set-up where it arranges in-house training and sponsors employees to external training programmes.
The management information system at KRIBHCO covers its internal operations and the marketing network using the relational database management system, using client/server technology. An integrated system at plant-level comprises of financial accounting, payroll, fixed assets, purchases, stores, production, maintenance, transportation, personnel & administration and MIS. Administrative and marketing offices have financial accounting, inventory management, payroll and provident fund management systems. E-mail, intranet and Internet facilities are provided at all offices. Computer training is provided to staff on a regular basis. Information security is done through installation and upgrading of anti-virus programmes. With the IT infrastructure being accessed from various locations, network and data security are important concerns. The society has an official website at http://kribhco.net/english.
Vigilance is considered important at KRIBHCO, on par with other functional areas. It is aimed at preventive vigilance and at ensuring transparency and accountability. The vigilance department works for systems improvement and simplification and codification of rules and procedures for the smooth functioning of the Society. There is a chief vigilance officer at the head office and vigilance officers at plant and zone levels. There is a three-pronged vigilance policy in place, aimed at creating awareness, preventing unethical activities and punishing misdemeanours. The board of directors oversees vigilance through six-monthly reviews. An internal enquiry was recently instituted to investigate allegations against the serving marketing director, indicating the efficacy of the vigilance function.
KRIBHCO is exploring the possibility of setting up a joint venture fertilizer project in Algeria. KRIBHCO is in the process of signing a memorandum understanding with the Chhattisgarh State Electricity Board (CSEB) to set up a 2000 MW power project. It is planning to enter the DAP market in India. KRIBHCO had put in Rs. 50 crore for an all-India rail operations licence for railway container operations. International consultant KPMG is reported to have submitted a business plan to KRIBHCO for running trains in the area of Gujarat, Northern Maharashtra and Western Madhya Pradesh. KRIBHCO has signed a deal with the Railways in 2007 for the operation of container trains for 20 years. It would tie up with other operators to run the depot. KRIBHCO is keen on a roll out for the procurement of wagons.
There have been problems in the past between KRIBHCO and IFFCO as rivals in the fertiliser industry. Equity investment of Rs. 97 crore was retired by KRIBHCO to IFFCO which had equity participation. There have also been issues related to the alleged interference of the Department of Fertiliser, Government of India, in the internal affairs of KRIBHCO.
1. Keeping in view the status of KRIBHCO as an organisation in the governmental cooperative sector, comment on the adequacy of the functional policies in the light of what you have studied in this chapter.
2. Suggest directions for KRIBHCO’s top management regarding functional policies, in view of its ambitious future plans.
CASE – 4 CORPORATE RESTRUCTURING OF THE INDIAN RAILWAYS
On 16 April 1853, a locomotive pulling 14 carriages and 400 people left what was then Bombay, to the a 21-gun salute, and shuttled to Thane, 34 km away. The journey took about 75 minutes. That was the way Indian Railways was born. Some estimates consider the Indian Railways as the world’s largest commercial enterprise in terms of the number of employees.
Indian Railways is a departmental undertaking of the Government of India. The Central Ministry of Railways oversees the policy making for the Indian Railways and is headed by a union minister. There are some ministers of state holding specific responsibilities. The administration of Indian Railways is done through the Railway headed by a chairman and having six members.
There are 16 railway zones, each headed by a General Manager who reports to the Railway Board. The zones are divided into divisions under the control of divisional railway managers. There are 44 departments, including those of engineering, mechanical, electrical, signal and telecommunications accounts, personal and operating, commercial and safety branches. At the operational levels, there are station superintendents and station masters who control individual railway stations. Apart from the Indian Railways, the Ministry also has a number of public sector enterprises under its administrative control. There is an autonomous organisation called the Centre of Railway Information System, dedicated to developing specialilsed application software for the railways.
The financial matters of the Indian Railways are dealt with through an elaborate system involving the parliament of India down to the accounts departments at the divisional headquarters. The Railway budget is presented every year and passed by both houses of the parliament. The budget is based on the expected traffic and the projected tariff and the funds required for the capital and revenue expenditure. Dividends are paid to the Central government on the capital invested. Indian Railways is subjected to the same audit control as other government ministries and departments.
The Indian Railways is Asia’s largest and the world’s second largest rail network under a single management. It is a multi-gauge, multi-traction system covering over 60,000 route kilometers, with 300 railway yards and 700 repair shops and covers most of the country’s vast geographical spread. The rolling stock fleet of the Indian Railways comprises 7,566 locomotives, 37,840 coaches and 222 million freight wagons. With a workforce of around 1.4 million, it runs more than 11,000 trains daily.
The Indian Railways has evolved into a vertically integrated organisation. Various units are engaged in designing, manufacturing, and maintaining the rolling stock, running institutions such as hospitals, schools, housing estates and hotels and catering. It issues licenses to a large number of uniformed porters and authorised hawkers. These are only some of the major activities that the Indian Railways perform.
There are many problems facing the Indian Railways. Among these, the major ones are:
- Cross-subsidisation of passenger and freight tariff
- High energy and fuel costs
- High accident rate
- Antiquated communication, safety and signalling equipment
- Ageing infrastructure including rail tracks and bridges
- High establishment and personnel costs
- Emerging competition from low-cost airlines.
Many areas of the Indian Railways are in need of improvement. Several actions have been taken over the years that include:
- Upgrading technology, especially the application of IT
- Improving the quality of railway services
- Production of better quality locomotives and coaches
- Introduction of fast long-distance trains
- Addition of value-added services such as introducing banking facilities on trains
A Status Paper on the Indian Railways was issued in May 1998, followed by another in 2002. These status papers underlined issues confronting the Indian Railways and possible options. The Status Paper-1998, for instance, focused on strategies related to honing the marketing for bulk and non-bulk freight and passenger services, reducing operating costs, evolving a financial strategy, bringing about cultural change and addressed issues of concern in areas such as research and development and IT. Similarly, the status paper of 2002 presented several issues and posed several questions related to its functioning.
A report published in 2001 by a government-appointed group chaired by Rakesh Mohan, now the deputy governor of Reserve Bank of India, called for a radical restructuring of the Indian Railways. The main thrust of its recommendations was on shedding the non-core activities such as catering and manufacturing not related to its main activities of passenger and freight transportation and becoming a focussed organisation.
Freight has been the key revenue earner for Indian Railways. The target for 2007-08 is at 785 million tonnes. The market share of freight traffic had been on the decline over the last few decades, owing to the improvements of road infrastructure. To arrest this decline, it became imperative to: enhance customer responsiveness through cargo visibility and information dissemination, reduce operating expenses and improve asset utilisation. In order to achieve this aims, the Indian Railways installed a computerised Freight Operations Information System, with the assistance of CMC Limited.
There is much hype around the financial turnaround of the Indian Railways. Here, the major achievements have been in the areas of improved freight and passenger earnings, gross traffic revenue, higher cash surplus, higher net revenue, better operating ratio and return on capital. For instance, the Indian Railways is proud of its achievements in terms of an above 78 per cent operating ratio and a 20 per cent return on capital in 2006-07.
Overall, the Indian Railways have benefited from several managerial initiatives taken over the recent past, such as corporatisation of many of its activities and hiving off, separate companies to perform functions performed in-house earlier. For example, the Indian Railways Catering and Tourism Corporation took over the non-core activities of catering while RailTel Corporation was formed to create the optic fibre network for communications. Another subtle manner of change seems to be the creeping nature of privatisation of non-core services and adoption of modern business methods of marketing and human resource management to improve operational efficiency. These seems to be working though critics say that the increase in the general economic activity and overloading of wagons is the cause of this improved short-term performance.
Certain inherent issues have become a part of the Indian Railways heritage. Among these are: overdependence on freight business, much of freight business arising from a select few commodities, passenger traffic being concentrated in low-yield suburban traffic and high density of traffic in the certain areas coupled with under-utilised assets and facilities in others. The fundamental issues of the dilemma whether Indian Railways is an organisation in the nature of a public utility, designed to discharge social obligations, or is it a commercial organisation for which financial performance and operational efficiency are imperative still remain.
1. Comment on the steps taken to reduce the extent of vertical integration at the Indian Railways. Suggest a few more measures that could be taken.
2. Discuss the measures taken for corporate restructuring of the Indian Railways. In your opinion, are these adequate for dealing with the problems faced? Why?
3. Propose the basic elements of a corporate turnaround for the Indian Railways.
CASE: 5 EXERCISING STRATEGIC AND OPERATIONAL CONTROLS AT iGATE GLOBAL SOLUTIONS
The Bangalore-based iGATE Global Solutions is the flagship company of iGATE Corporation, a NASDAQ-listed US-based corporation. Known earlier as Mascot Systems, it was set up in India in 1993, to offer staffing services. It acquired business process outsourcing (BPO) and contact centre businesses in 2003, making it an end-to-end IT and ITES service provider. Its service portfolio includes consulting, IT services, data analytics, enterprise systems, BPO/BSP, contact centre and infrastructure management services. iGATE has over 100 active clients and centres based in Canada, China, Malaysia, India, the UK and the US. Chairman, Ashok Trivedi and CEO Phaneesh Murthy, an ex-Infosys IT professional and their partners hold a major stake, with some participation by institutional and public investors. The revenues for 2006-2007 are over Rs. 805 crore and net profits, Rs. 49.6 crore.
The corporate strategies of iGATE are offering integrated IT services and divesting the legacy IT staffing business and possibly making acquisitions in the domain expertise for financial services businesses. The business strategy is focused differentiation based on the focal points of testing, infrastructure management and enterprise solutions. The competitive tactic is avoiding head-on competition with the formidable larger players in the industry by carving out a niche. The business definition is serving large customers and staying away from sub-contracting work.
iGATE adopts a differentiation business model based on an integrated technology and operations model which it calls as the iTOPS model. This is an advancement over the prevalent model in the ITES industry based on low-cost arbitrage model. iTOPS is based on transaction-based pricing for services and supporting the clients by providing the platform, processes and services.
The strategic evaluation and control has both the elements of strategic as well as operational controls.
The functional and operational implementation is aimed at achieving four sets of objectives:
- Shifting from small customers to large customer (Fortune 1000 companies)
- Shifting away from stocking to project-consulting assignments
- Working directly with clients rather than with system integrators
- Moving from a local to international markets
Some illustrations of the performance indicators that reflect these objectives are:
- On-shore versus off-shore mix of business revenues: In 2004, this ratio was 55:45 and in 2007, it has improved to 27:73, indicating a much higher revenue generation from off-shore business.
- Billing rates: Revenue charged from clients on assignments. With project consulting assignments from off-shore clients, where the revenues are typically higher, with lower costs and higher productivity in India, the realisations from billing have to be higher. The industry norms for ITES are US$18-25 per hour for off-shore and US$ 55-65 per hour for on-shore assignments.
- The number of large clients from Fortune 1000 companies: Presently, iGATE has nearly half of its more than 100 clients from Fortune 1000 companies, of which the top 10 account for 70 per cent of its business.
- Controlling employee costs: This is an area where concerted effort is required from the HR and finance functions. Hiring less experienced employees lowers the compensation bill. In the IT and ITES industry, attracting and retaining well-qualified and experienced employees is a critical success factor. The performance indicator for this objective is the cost per employee.
- Human resource metrics such as the hiring and attrition rates: In the IT and ITES industry, the human resource metrics such as hiring and attrition rates are critical indicators. Increasing the number of employees and lowering the attrition rate by retaining the employees is a big challenge. There are presently about 5800 employees, likely to go up to 8500 in the next two years. The attrition of 20 per cent presently at iGATE is on the higher side. But such attrition is common in the industry where the employee mobility is high and employee pinching a widespread trend.
The human resource management function being critical in an industry where so many challenges exist, needs a strong emphasis on training and development, motivation, autonomy and attractive incentives. iGATE has an integrated people management model focusing on developing technical, behavioural and leadership competencies. The three metrics by which the HR function is assessed are: human capital index, work culture and employee affective commitment. The reward system at iGATE consists of meritorious employees across all levels being granted restricted stock options, thus providing an incentive to remain with the company till they become due. The company, though, is an average paymaster, which disadvantage it tries to trade-off offering a more challenging work environment, quicker promotions and chances for practising innovation.
Critics say that that iGATE lacks the big-brand appeal of the larger players such as Infosys and Wipro, cannot compete on scale and is still under the shadow of its original business of body-shopping IT personnel.
1. Analyse the iGATE case to highlight how it could apply some of the strategic controls such as premise control, implementation control, strategic surveillance and special alert control.
2. Analyse and describe the process of setting of standards at iGATE.
3. Give your opinion on the effectiveness of the role of reward system in exercising HR performance management at iGATE and suggest what improvements are possible, given the environmental conditions in the IT/ITES industry in India at present.