John Linton
As one of the founders of an Australian company that, after six years, still has seven out of the first ten employees it hired I read this with some surprise earlier today:
http://blogs.wsj.com/digits/2010/04/15/can-infosys-keep-workers-with-hefty-raises/?mod=rss_WSJBlog&mod=
as I 'wandered' through the overseas press. Sure it relates to support centre staffing in India but it surprised me because of the ridiculous nature of such personnel policies......and I understand that I know nothing about the competitive situation between companies employing support centre staffing in that city, or indeed, in that country. I also understand that companies like Infosys have been using Bangalore as an outsourcing centre for almost 30 years and understand infinitely more about their hugely successful operations than I do about our very small operations in Colombo. In fact Infosys was one of the companies I did some research on before we went ahead with our operation in Colombo.
When we began to think about how we might operate our back end services in another country in November 2005 one of the early conclusions we came to was that we would not base it in India because of the long established presence of many multi-nationals of immense world wide 'stature' as well as many Indian outsourcing companies - dominated by Infosys. That meant to us, naive as we very definitely were, that just hiring people would be difficult (unknown company/tiny size) and then keeping people with so much competition for personnel would become a major and recurring issue.
So we found another location which was not going to be considered by US and EU companies because of its, then, 25 year old civil war and the fact that there was not a 30 year 'history' of English speaking call centre employment. Colombo became an obvious choice as did having a personnel policy of paying treble what the 'going rate' was for technical degree qualified, English speaking personnel. We obviously haven't made the 'savings' that the US multinationals, and Infosys, have as our remuneration, based on this article, is double what Infosys is reported to pay but still one third of what we would have to pay in Australia....at least in general terms. But we are more than happy to set our personnel remuneration structures in Colombo at a minimum of double that of other companies in the same fields of operations because we want to emulate what we do in Australia - we don't want the problems associated with continuing personnel turnover because of paying our people less than other similar positions are paid by other Sydney companies.
The costs of hiring and training personnel, even if they come with previous job experience is huge - as anyone who has had such responsibilities in commercial life would know. Our most recent experience of hiring a corporate sales 'team' is that the initial hiring and training cost is around $A50,000 per employee based on the 14 hires we have made over the past 12 months. The damage to any commercial business if an employee leaves is equally large (apart from losing the $A50k training cost) and the loss of momentum in an area of your company when a knowledgeable person decides to further their career elsewhere is seldom 'caught up' which can often not only affect the other people in that specific 'team' but in other 'teams' that interact with them. All this is better known to anyone who is responsible for hiring and training personnel than it is to me.
So why do companies pay badly? Usually because they can and their commercial imperatives are based on paying as little for as much as possible and they have a 'culture' of doing so - in instances where the supply of potential employees exceeds the demand and like all 'pricing equations' keeps 'prices' low due to the inherent competition for employment. After almost 30 years of being in business in Bangalore it appears that Infosys drove 'employment pricing' below whatever 'floor' exists in employment markets and other companies saw an easy way of reducing their own employment costs by 'luring away' experienced/trained personnel from Infosys rather than bearing those costs themselves. It seems a self evident situation and presumably the senior management at Infosys became too complacent, and too greedy, and are suffering the consequences. It's understandable in very large companies where, despite any fluff and sugar coating, employees are inevitably 'units of labour' rather than individuals.
Small and even 'middle size' companies cannot treat their people as 'units of labour' or anything approaching that evaluation because of their small size where each employee's personal circumstances is well known to the owners/managers of the enterprise and 'lean' operations are more vulnerable to losing personnel than the more bloated personnel establishments of large companies. So smaller companies tend to not only pay their people better but they take much more interest in each employee's career and personal development - obviously a wide generalisation and equally obviously not true in all cases but basically true in my experiences.
Surprising that such an experienced company such as Infosys seems to have got such a well established methodology so wrong to the point where their personnel loss has reached such a high percentage of total employees.
10, 9, 8,.......