A simple case analysis to find out the need for continuous flow of low cost skilled talent(human resource).
Let’s say there are 5 IT companies who are into web development. Each of these companies has 10 IT employees. Out of these 10 IT employees – 2 are designers and 8 are developers. Assume all of the 8 developers are working on open source technologies. So that means total existing resource = 2*5 = 10 Designers and 8*5 = 40 Developers. Total = 50 resources. Now imagine cost of a designer is Rs 5k per month and for a developer it is Rs 8k per month. As the business requirement increases, resource crunch takes place in a particular organization. Due to lack of flow of fresh talents, the company tries to pull resources from other existing companies. So the same designer whose rate earlier was 5k per month, now is hired for 8k-10k. Hence the cost goes up. So a project/work which the company was previously doing at X amount of money, now to do the same kind of work it costs 2X. This is because the resources hired are now costlier than before. But, the company at the same time also has to make profit. The companies are unable to find fresh talents with required skill sets because they are not available. Hence, flow of fresh skilled low cost talent is required.
Lets look into another case, with the example as above stated company structure – 2 designers & 8 developers. In most cases a single developer can handle a maximum of 2 client projects (if the scope of project is more, then minimum of 2 developers can handle a single project).
Development is not just coding, but it also includes documentation, client interaction and testing. Hence a single developer has to devote almost 10-12 hours in a day to work on 2 client projects. Question is why the developer is working on 2 projects and why not 1?
The answer is very simple; the company does not have any other options. Companies cannot hire fresh talents because they are not skilled as per the requirement and the companies are not able to hire from outside(other companies) because to hire the resources they have to be paid more and if the resource cost(hiring cost) goes up, the project cost will go up and ultimately the company will lose the project/client.
And those developers who are working on 2 client projects, does not get time to do self study, their quality degenerates and productivity gets affected and all these ultimately affects the clients. Hence continuous flow of fresh skilled low cost talent is required to stabilize the situation.
Remember the keywords: Continuous, Fresh, Skilled, Low-cost. You cannot ignore any. To achieve the exact match continuously is really a challenge, which most of the SMEs are facing all over India.
Note: Companies here in the study denote SMEs with employee strength 1-20.