Model for human resource planning of a software services company

Abstract

As India continue to be the favorite offshore destination for software services, the demand for qualified IT professionals have been rising exponentially. Because of which the time to hire , cost to hire and cost to retain a resource is on the up. On one hand, a typical Indian software services company doesn t have a proper model for predicting the human resources requirements. Due to which some companies, after bagging an assignment, start looking for human capital with necessary skills and put the success of the project in jeopardy as the projects may never take off or they will have a schedule and effort overrun. On the other hand, some companies have lot of human capital on bench, the situation as of now may not be too taxing on the companies as the margins involved are high and they can afford to have high bench strength. However with large multi nationals setting up offshore development centers in India, increase in local competition, and appreciation of Indian rupee against the US dollar, the margins are on decline. With thinner margins it will become difficult for companies to attract and keep talent on bench, and the situation for the companies will not be as rosy as it is today. Tax sops on profits derived from export of software will get over by 2009 end, which adds to the revenue management problem. Companies realizing the magnitude of the problem are looking towards growing in the domestic market, however domestic market gives a margin of about 5-6% compared to about 27-28% in exports at present. We attempt to draw parallel with the traditional inventory management system and forecasting techniques to come up with a model, that will help software services companies to optimize the bench strength with a reasonable forecast of the human resource requirements, depending on various parameters like projects in the pipeline, lead time involved in getting a candidate on board, technology involved, number of people with the required skill set available in the market, bench cost etc. Optimum bench strength will help the companies to reduce their cost of human resources and enable them to provide services at more competitive rates.