Roll No. : 110
Specialization : IT |Finance
The views expressed by the author are completely inline with the trends the world economy is following and provides a roadmap to a much more cost effective and agile organization in terms of employee base and skills.
The following of such a model where organizations are looking towards a small core permanent group and then hiring contract labour or outsourcing the remaining work is a key method used in reducing the inefficiencies of having permanent employees. There is very little incentive to constantly upgrade their skills and increase their efficiency and performance for permanent employees. No where is this more pronounced than in the government sector of India where hiring of permanent employees have come to a virtual stop primarily because of the increasing inefficiencies and the enormous pay burden that gets added.
To prove the validity of such a model is the Indian Software Industry. The Indian software industry faces one of the highest attrition rates with employee retention being one of the biggest challenges faced by the industry. Yet in the face of these challenges no company has resorted to hiring permanent employees to retain talent. The reasons are very clear, hiring permanent employees would create a large pool of employees with certain skill sets that might become obsolete in sometime and training employees permanent employees would lead to huge costs and problems for the company to train employees who would remain in the company despite not upgrading their skills. Also there is an opportunity cost of hiring people who already have the required skill set.
The formation of ad hoc teams and outsourcing would help in a more efficient environment as now all companies would have to focus only on their core competencies and leave the other functions to people whose core competencies are those...