HR practices in software multinationals and focussing on issues and challenges on managing performance in virtual teams

Abstract

According to NASSCOM’s latest report – ‘The IT Industry in India, 2005, A Strategic Review’ - the Indian Information Technology and IT enabled services (ITES-BPO) is exhibiting double-digit growth (approximately 28% p.a.). Industry revenues are reported to exceed over USD 28 billion and 60% of this is counted for by the IT services and software segment alone. Exports to the Americas, Europe, Singapore, Japan and Australia are the mainstay of Indian IT-ITES accounting for over 60% of the industry earnings. The Indian IT industry is as such maturing and moving up the value chain by offering high-end services at stable prices and exhibiting broad-based growth through an expanding customer base. A significant trend has been the increasing popularity of the offshore delivery model primarily due to total transaction cost economics. An offshore delivery model is one where a client out sources its software development work to a vendor in another country (usually a low-cost destination) to save costs by using the services of cheaper but more skilled labour. There are also other advantages to this model such as access to a wider skill set, shorter project life-cycles that leverage the difference in time zones, efficient deployment of resources and so on. There has been a marked shift from onshore delivery and one-off offshore deliveries to a “more mature, distributed global delivery model, which leverages the best skill-sets that different geographies have to offer2.” Offshore services comprise 50% of the IT service exports. India has managed to maintain a competitive edge over other offshore destinations due to strong fundamentals comprising “a large and growing pool of qualified, English speaking manpower; keen focus on defining and adhering to global quality standards, demonstrated emphasis on information security, etc”1. Among the five key issues that NASSCOM has identified as requiring attention from the government and the Indian IT Industry, one of them is the need to build a “multi-cultural organization with unifying values but a global workforce and global career tracks” 1. Indian vendors are entering into longer-term relationships with their clients involving complex tasks. From low-end activities and custom applications, they are now venturing into product development and IT consulting for export. As a result the nature of teams in software companies is changing from the traditional on-site or collocated teams to virtual teams i.e. teams whose members are geographically dispersed and communicate via technology. This gives rise to issues specific to a “global workforce” and includes cultural barriers, time zone co-ordination, etc. Hence the need to build a multi-cultural organization to cater to the present day needs of the industry. While there is no dearth of qualified knowledge professionals in the country, most of the new recruits in the industry are fresh graduates. While these employees may possess the requisite technical skills, much is to be desired with respect to behavioural competencies necessary for a job in the software industry and skills required to work in global and multi-cultural teams. Again, according to Tschang3”…there is a shortage of middle-level systems analysis and project management skills”. Due to this shortage, many companies promote software professionals at a very early stage in their career to assume managerial responsibilities. Lack of soft skills, appropriate competencies and an understanding of the nuances of managing in virtual teams, results in several problems affecting the performance of the team. This also poses a barrier to growth of the industry.