Outlook for the IT Companies, Jan 2011

There have been lot of speculations on the golden days of the IT sector being over. Lot of people have been cautioning the students in terms of blindly running behind IT as a career, but the IT sector keeps on providing good news for everyone including the prospective employees and the investors.  Here is a broad overview on the performance of the top companies in the IT sector:

• The demand for IT outsourcing remained intact for the top IT players during the December 2010 quarter.This was despite the concerns over economic recovery in the US and Europe.
• The largest IT exporter TCS and the fourth largest HCL Technologies reported better business volumes than Infosys and Wipro,which are the second and third-biggest IT exporters in that order.
• The overall sequential growth at the aggregate level for the top four IT companies was moderate during the December 2010 quarter compared with the previous quarter. Net profit grew by 6.8%,slower than 9.2% in the September quarter.The companies were able to retain their operating margins during the December 2010 quarter for the second consecutive period even though the rupees movement against the major currencies was unfavourable.
• With economic uncertainty again looming on the horizon,clients are once again looking at a short term execution time frame.Instead of engaging into long-term contracts,these are broken into either smaller projects or the duration of contracts is divided into smaller periods.
• The rupee has gradually appreciated against the dollar for the past three quarters.An appreciating rupee hampers the realisations of exporting sectors.But this so far has not affected the performance of the top tier IT firms since many of them had booked forex hedges at higher rupee rates against the dollar in the past.These hedges are almost a year old now and most of them would expire in another couple of quarters.This may expose the net profitability of these companies to the forex fluctuations.
• On the positive side,top companies are still in a hiring mode.Companies,including TCS and Infosys,are expected to add more lateral or experience employees in the coming quarters.This serves as a leading indicator of the future demand.

 

Project Allocations to the new hires

After a candidate is hired, most of the IT companies have to then decide about the assignments of the available resources to the various projects. The allocation decisions are taken by the resource managers after matching the requirements of job with the qualifications of a candidate . Most organizations put new recruits on probation for a given period of time after which their services are confirmed . During this period, the performance is closely monitored. If the new recruit fails to adjust himself to the project's requirements the organization may consider his name for allocation elsewhere. 

As far as the organizations are concerned, the Project Allocation is a very crucial activity and a poorly taken decision may create employees adjustment problems leading to absenteeism, poor performance and even attrition. The panic mentality that dominated students minds inn 2009 is over.  As result, students are confident of getting worthy jobs this year. Though the demand from European and American markets has not increased, Asian markets like India and China are showing a rise in demand.  Hence, project allocation should be done properly keeping in mind the employees preference for location, technology, nature of project and working hours. Though, invariably most of the time, it would not be possible to satify the preferences, however, the enire process should be open and the new recuits shouldn't feel deprived due to lack of organizational procedures. There should be conscious and determined effort to educate the new recuits about the process of project allocation, project rotation policies, pros and cons of projects of various types etc.

As far as the new recuits are concerned, they should also unedrstand that in the begining of their career, they should demonstrate huge flexibilities and not hinder their career due to lots of superficial constraints created mostly by the close friends and family members. The most successful people in the corporate career will tell you that most of the time, they never questioned any project allocation, they just asked, "when to start"? After all, the organization would like to make the best use of the employee's skills withthin their constraints.