Infosys’ HR recipe for auto sector

There is a sense of déjà vu as the Indian automotive industry attempts to become a global player. Much like the IT industry before it, this sector too faces some of the same problems and issues that confronted local IT majors as they took their first tentative steps in internationalising their businesses. These issues include finding, training and retaining the right talent both here and in markets around the world, and more importantly creating the right strategy to work around the cultural issues they are bound to face in the international markets.

As the auto industry enters a high growth phase it is also enter a period where human capital will prove to be a constraining factor to growth. And as it globalises, it will face competition for this capital both at home and worldwide. And globalisation will also bring with it the challenges of a multi-cultural workforce. The IT industry has confronted similar challenges over the past decade, and continues to face it to this day.

IT companies have evolved distinct strategies to counter these issues, and the experiences of one of the best – Infosys Technologies – could be a pointer to the way engineering services companies can overcome these problems. Nandan M Nilekani, CEO and managing director, Infosys Technologies addressed some these issues at the recent SIAM Annual Convention in New Delhi. He was of the opinion that a well thought out HR policy, formulated at the stage when companies begin their international interactions, could mitigate many of these issues.

He said that one lesson his company learnt very early on was that if one really wanted to scale up in a people business, which the IT industry is, then it was imperative to investment in training. Infosys has invested Rs 140 crore this year on training alone, and that over the years the accent has changed from technology training in the earlier years to developing a whole array of skill-building capability. Today, the company imparts training in technical, quality, customer negotiation, cross-cultural skills to its employees.

Nilekani said that companies could not depend on the marketplace or the academic ecosystem to ensure that the people they recruited had the relevant skill sets. Infosys has invested $140 million (Rs 644 crore) into building its own corporate university in Mysore where every one of the 25,000 people it recruits every year is trained in a residential environment. The company plans to invest an additional $300 million (Rs 1,380 crore) on this campus so that it becomes a truly world-class facility.

“We cannot grow unless we do these things. Also, we find that this gives us enormous leverage because we are able to take very good, very bright people and bring them up to speed by empowering them with the required skills,” he said.

##### The Mysore campus also hosts the Infosys Leadership Institute, where the focus is on taking the cream of the talent – about 400 to 500 of its leaders – and tailoring a career development programme for each one of them individually. The company identifies the gaps in their skills or capabilities and works out a programme by which these people are systematically exposed to opportunities, assignments, training and experiences so that they become well grounded leaders. This ensures that there is a cadre of leaders ready to take command in the coming years.

The IT and BPO sectors are expected to employ 2.3 million people by 2010 when export revenues are expected to touch $50 billion dollars. It is estimated that for every job that is created in the IT sector an additional five jobs are also expected to come up in the allied industries. Nilekani conceded that the automotive engineering industry could create far more jobs than this in the next ten years, and enter the high growth phase being experienced by the IT and BPO sectors in the past several years.

To put this into perspective, Infosys’ revenues, when it went public on NASDAQ in March 1999, were $121 million (Rs 550 crore). In March 2004, its revenue touched the billion dollar (Rs 4,600 crore) mark going on to cross the $2 billion (Rs 9,200 crore) figure in March 2006. The current estimate for 2007 is $2.9 billion (13,000 crore). Nilekani said that the automotive industry could also post similar growths provided they invested in the right HR policies in attracting, training, retaining and empowering people.

ATTRACTING TALENT

With every sector of the economy booming attracting the very best talent would be a challenge, Nilekani said. The resources are fungible in the sense that engineering graduates who go into the IT sector do not necessarily have a computer background and so everybody is competing for the same resource pool. The best talent will go to those companies which create and deliver the best value proposition.

The other thing is that apart from the domestic automotive industry, as India becomes a big engineering services outsourcing base, global players will also compete for the same talent. And, there will be added pressure from other industries that are also growing! Therefore creating the right employee value proposition becomes very important, Nilekani said.

When Infosys went public in 1992-93 it realised then that if had to compete with huge multinational like IBM, Texas Instruments, Hewlett Packard, Tandem and Verifone then it had to define a clear value proposition for its potential employees. Over the last 15 years, the company has invested a lot towards this in terms of quality of work, infrastructure, training facilities, compensation and career development. In the process it has transformed the Infosys brand as the best company to work for.

##### “We wanted to be the best in class in every dimension of human resource. Fifteen years later, I’m happy to say that this has become a tremendous source of advantage for us. We have worked towards becoming an aspirational employer,” he said.

On its part, Infosys is working on addressing issues that go beyond a company and have national implications, and these pertain to expanding the availability and quality of talent. For example, the company is working closely with policymakers to encourage more private investment in engineering colleges. It is also working with the All India Council for Technical Education (AICTE) in developing the right curriculum. It has a programme called ‘Campus Connect’ where it upgrades the skills of the faculty of some 250 engineering colleges across the country, besides helping them design the right course content.

“I would think that SIAM should, as a group and an association, see how it can expand the overall pool in the country so that the auto industry attracts the right kind of people with the right kind of skills. You can work with the system to expand the capacities of colleges, ensure that the course content is relevant to your needs, and help upgrade the quality of teachers. This has to be a strategic decision to expand the scope of talent,” Nilekani said.

GLOBAL SCENARIO

Also, in a globalised scenario, a company’s local brand proposition alone would not help it attract the very best talent. What is needed is a clear strategy to recruit and retain talent. Realising this Infosys put into place a programme called Instep, which is its global internship programme. Every year, the company gets about a 100 college students from across the world to do an internship with it. This is one way to make these young people aware of Infosys as a company.

As the Indian automotive industry globalises through exports, subsidiaries and acquisitions, it will also face the prospect of dealing with an ethnically diverse workforce. A strategy to deal with this would stand companies in good stead, Nilekani said. “The industry will have to plan for this right now, and unless you get it right you will not be able to attract the bets people abroad,” he cautioned.

Empowering and motivating a workforce are other areas that Infosys pays close attention to. Today, the company has an attrition rate of 10 percent. This is higher in the IT industry as a whole and higher still in the BPO sector, where attrition rates are as much as 30 percent. Clearly, therefore, there is the need for a clear strategy on retaining talent. This is a challenge that the auto industry will also face in the coming years. At Infosys, training and constant upgradation of skills plays an important role in employee retention. This runs counter to prevalent logic which says that such trainings only makes the workforce more marketable and therefore increases the attrition.

“We believe this is a wrong attitude because what we found was that people stayed with us longer when we invested in training them. Our strategy, therefore, has been to use training as a tool to retain people. We would recommend that the auto industry do this as well, because it pays for itself in the long run,” Nilekani said. Infosys has systematic appraisals which encourages meritocracy, and helps in career development. There is also an incentive-based compensation that aligns individual benefits with corporate goals.

“There are a whole host of things we do through a system which enables us to be seen as a fair employer. We have very sophisticated internal employee satisfaction surveys, which we take very seriously. We use the data we collect to drive changes in our strategy. We have found that making employees part of this strategy empowers them,” he said. Nilekani attributed the worldwide success of his company to its people-centric strategy. Perhaps this is the cue the auto industry can follows as it sizes up the world!