Chronic low Productivity as Industry Risk

The image above is clickbait. There is no problem with the CEO compensation or the fresher annual pay - the real problem is lack of productivity.

Revenue per person in 2021??(in USD)

• TCS- 43,409??
• Wipro 42,775?
• Infosys- 51,908
• Accenture – 71,126 ( 37% more than the nearest Indian rival)

Revenue per person in 2016 (USD)

• TCS- 46,758
• Wipro- 42,485
• Infosys- 48, 963

Why is this a problem; A Low Revenue per person means-?

• Quality of work undertaken?is low value and not improved over time
• Changes in leadership – have not increased productivity = Leadership quality is poor .
• The promise of digital improving profits and productivity have not been realised
• Business model changes have not materialised and the comfort zone of Cost plus revenue model stays

Shrink-inflation in Retail = Pedigree shrinkage in IT Services

How do you still get a packet of Parle glucose at 5 bucks- the weight of the product has been decreased over a period of time to retain it at the magic 5 rupee mark. And in IT Services it means-

The big 3 Services firms hired from Tier 2/3 colleges for entry level jobs in 2010; They are now hiring from Tier 3/4 – which is not necessarily a bad thing – labour market dynamics means the better college folks are getting better jobs. But pedigree shrinkage cannot continue as below a certain category of college- the quality of education is abysmal?

High revenue per person means- More product & More consulting

Apart from Finacle ( infosys-banking platform) what are the top 5 products created by the Indian IT Services giants ???

Consulting teams at Accenture, Deloitte are far superior than what the Indian IT giants have been able to put together . Compensation differentials are telling – We did middle management roles for a client in IT strategy – and Accenture for someone with great pedigree and 10 years experience ranged between 40- 60,00,000 INR pa ; While similar pedigree folks in Infosys Consulting were at the most 40,00,000 INR pa

I would be really interested to see how Capco evolves in the Wipro ecosystem. A lot of earlier acquisition by the big 3 have been; for want of a better word- "asset stripping" for clients and talent and then left to languish as the better folks and leaders find other pastures

Radical Solution- 2 CEO's

Creating Products or getting a high level consulting revenue stream going are long gestation projects and paraphrasing Einstein?– “We cannot solve our problems with the same thinking we used when we created them OR with the same organisation design and approach to Talent which created them?

A leadership team under constant quarter/ yearly target pressure will regress back to normal- i.e take the easy way out – and continue business as usual. The new CEO can create an organisation focused on Consulting & Product Development?and that would mean?

• New organisation design, delivery structures & leadership.
• A totally different talent approach- profile of people,?Compensation & Rewards, Development & performance management.?
• Instead of losing your better people to?product companies, captives, consulting firms and e-commerce?– might as well “promote” them to a better business with higher productivity and revenue?
• The Big 3 firms have the cash to do this tomorrow – the willingness & courage?is a matter of choice!?

Omar Farooq- Founder & CEO AceProHR

References

• IT CEO pay shot up 835% in a decade while fresher’s salary grew 45%
• TCS, Infosys, Wipro see decline in revenue per employee in FY16
• Why revenue per employee in IT firms continues to grow slow despite huge growth in digital
• TCS- Financial Results 2021
• Wipro Financial Results 2021
• Infosys Financial Results 2021
• Accenture 2021 Financial Fact sheet