Business

Coping with benching

How many have you benched? In IT services industry, this verb does not signify sweating under the press but a different kind of strength. The challenge organisations face in the current economic situation is how to hold on to this strength without letting it overpower them.

“IT service companies take people based on probability of growth,” explains Diptarup Chakraborti, principal research analyst at Gartner. Based on last year’s growth, a company forecasts growth for the current year and the people required to meet that growth. “If the expected growth does not happen, or the size of the project is smaller than predicted, there is redundancy in the system,” he says. This redundancy leads to benching.

T. Sridhar, Chief People Officer, Cognizant Technology Solutions, explains what it boils down to in an IT service organisation: “There are just two categories of employees — those who are billed and those who aren’t, but support the billed team members in providing value to the clients. Those who aren’t directly billed might be shadow resources, who are in all ‘preparedness’ to jump into a billable position as and when the projects ramp-up.”

Benching thus becomes a necessity to react to the customer’s needs quickly. Sean Narayanan, Chief Delivery Officer, iGATE, says, “Efficiency in managing the bench depends on how accurately the company can project its growth plans, mix of businesses and skill sets needed. By doing this, the company can ensure a minimum lead time in getting the business and starting the production.”

A way to measure this efficiency is resource utilisation ratio, which is the number of people billed to the total number of people in the firm, higher this ratio means fewer on the bench. Utilisation depends on growth and economies of scale, says Mr. Sridhar. Higher the company’s growth, lower the utilisation.

A fast-growing company will take more people anticipating high rate of growth. Hence, utilisation is lower. Once it reaches a stable rate of growth, the utilisation will become higher. “For example, in a company that anticipates a high growth rate, the utilisation would be in the range of 60-70 per cent, whereas in a company that has a stable growth, a utilisation rate of close to 80 per cent is considered to be healthy,” says Mr. Narayanan.

From the employee’s perspective, the utilisation ratio should be preferably 100 per cent, especially in the current market. “Nobody wants to be on the bench even for a day now,” says Mr. Chakraborti.

Companies feel the heat too. Ekta Aggarwal, industry analyst, ICT Practice, Frost & Sullivan, South Asia and Middle East, says, “There is increased pressure to squeeze maximum revenue per employee, focus on performance improvement plans to retain the best talent and drive efforts towards maintaining a higher utilisation ratio.” This means the linear model of increased revenue through additional resources would give way to higher efficiency levels.

Already, new models are emerging. iGATE is working on a shared services model where a team handles multiple clients with the same set of resources, says Mr. Narayanan.

But, efficient utilisation still remains a goal far ahead. “IBM is twice the size of the largest IT service organisations in India and makes eight times the revenue,” says Mr. Chakraborti. “It is time to move away from ‘if you get an employee, you get revenue’ model,” he says.

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