In an environment where there is a perceptible drop in number of technology outsourcing and offshoring contracts impacting the profitability and revenue growth of the industry, Indian IT companies are now more focused more on the high performers to keep their engine chugging.
During the sector's heydays, employees across various levels, received very lucrative salary hikes, along with additional perks, and there was a slight leniency in measuring the performance standards. This regularly saw the average salary hikes being in the range of 20% plus with even the average performers falling into this bracket.
Companies are becoming more cautious these days as there is a very clear roadmap on the kind of targets that need to be met. It is more or less based on the principle of perform or perish, said, G C Jayaprakash, Asia-Pacific Regional Practice Leader, Technology, Stanton Chase, an executive search firm.
This trend was amply clear with employees from a cross-section of IT companies talking about their evaluation process in rather sober tones. An employee of Infosys, who did not wish to be identified said, The October appraisal was tough at certain units and we also expect a similar experience when the next round comes up in April.
There has been a case of a mid-tier Indian IT company saying that all those employees who are seeking promotion should first pass a test.
An employee of the BPO unit at Accenture remarked that their appraisal process was very tough unlike in the past. Today, this increasing performance barometer is being felt across all levels and the only exception being on people with less than two years of experience. Industry observers say normally performance review, which is an annual affair, is done twice a year and in some cases on a quarterly basis.
This growing focus on performance is also being driven by the customers of IT companies. Corporates today, while giving out their IT outsourcing contracts, are expecting a lot more from their vendors in terms of quality of people who are going to be employed, the level of expertise, etc. Adding to the pressure of performance are also the constraints that IT companies are facing with their budgets and they would like to allocate the resources to those groups or teams which give them the confidence that they would be able to achieve their targets.
Amitabh Das, CEO, Vati Consulting, a recruitment firm, said such kind of budgetary allocation would allow the IT companies to retain the high performers and also spur them to meet or exceed their targets.
In such a situation where there are fewer new job openings in the IT industry and salary hikes likely to be in the single digit range, employees are now coming under greater scrutiny.
However, this could also be an opportunity for the companies to reskill and retool their employees. Suparna Rao, Co-founder & CEO, Excellence4u, an employee assessment firm, said that the companies today are not looking at hiring just software coders, but also seek additional skills like domain and functional knowledge. She felt that companies are now paying far more serious attention towards reskilling their employees.
The $108 -billion Indian IT-BPM industry has now reached a size, where there is a more realistic expectation on the kind of growth rate the sector could achieve in the near future. Industry body Nasscom has projected a growth rate in the range of 12-14% for 2013-14 fiscal, though there are certain dark clouds hovering over the sector. Technology research firm Ovum said, Last year was the worst for IT services contract activity since 2002.
Performance in the three months to the end of December 2012 fell well below the levels seen in the same period of 2011, ensuring that annual IT services contract activity fell to its lowest level for 10 years, both in terms of total contract value (TCV) and deal volume. In Ovum s latest analysis of the IT services market, the TCV of deals announced in the fourth quarter of 2012 was $20.8 billion, down 34% on the same period of the previous year.