The Power of Building Talent Instead of Buying It

M. Lakshmanan, Chief Human Resources Officer, LTTS

M Lakshmanan in a tête-à-tête with All Things Talent talks about the recent IT hiring boom in India, the importance of growing talent, the gig economy, LTTS’ skilling programs, and much more.

There is a huge conversation around the IT hiring boom that is happening right now. In your opinion, is it pent-up demand or just the outcome of the pandemic? What is your understanding of the trend?

Three things are happening right now. Firstly, there is pent-up demand. Secondly, I think there is an increased amount of offshoring that has happened. One of the silver linings of the pandemic is that businesses now realise that if they can get their work done out of Ohio instead of San Jose or Cincinnati, then they can get the work done out of Bangalore or Mysore as well, which are relatively cheaper options. So I think offshoring has started happening in a very big way. Thirdly, I think it is the career aspirations of employees. As the demand for skills increases, the opportunities for people have gone up manifold, hence, there is a migration of talent from one company to another.

However, this is not the first time that we are seeing this talent migration. It happened twice earlier — after the Y2K boom and after 9/11, where we saw big hiring booms and similarly, we are witnessing the same pattern right after the pandemic. Therefore, the demand is real, but the reasons are many.

With companies getting work done relatively at a cheaper rate by hiring global talent, how does that impact the salary trends now and to what extent? 

It depends on the company’s revenue and its affordability to pay. I think all business leaders need to make changes to their existing business model accordingly to make sure that their business is viable. For example, when we talk about how salaries for software engineers have dramatically changed in the industry, we need to consider that the compensation level for a software engineering role in a product company, IT services company, and startup company will vary. So, if an engineer working in an IT services company joins a product services company at a higher salary, we can’t conclude that software engineers’ salaries have simply gone up. There is a temporary blip where the salary levels have increased, but this will eventually even out and come back to equilibrium. The compensation range will find an equilibrium in the next one or two quarters and come back to older levels.

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“There is a temporary blip where the salary levels have increased, but this will eventually even out and come back to equilibrium. The compensation range will find an equilibrium in the next one or two quarters and come back to older levels.”

In the last one year, hiring was volatile and led to a huge rise in the gig economy. So what happens to that economy now? Do the dynamics change?

India’s IT outsourcing wallet share has increased. That means there’s going to be space for everybody — fresh engineers, experienced engineers, and even gig workers. The talent shortage will continue to be there for another three or four quarters, thus making room for gig workers. But the important point is, the employment models will start changing slowly and steadily. Now it is no more about regular or full-time employees. You will now have fixed tenure contractors, external contractors, contractors for short durations, contractors working from remote tier-2 tier-3 locations for a finite period of time, etc. So we will have all kinds of employment models coming up and I believe that smaller startups will be in a much better place to take advantage of the changing employment models initially. Of course, the larger companies will also adapt to it, and the faster they do it, the better.

When we talk about employment models, is there anything new that LTTS is looking forward to?

We at LTTS, are closely observing if somebody has cracked the new employment models. So far, I haven’t. I’m still learning and watching very closely in terms of how these models will emerge and how soon they will emerge, but I haven’t really seen many companies fully crack this model yet. As soon as that happens, LTTS will be prepared and agile in adapting to those models.

You also mentioned talent shortages. As we all know that there is a huge demand for good talent, but is the demand for high-quality talent meeting its supply?

There’s always a demand for high-quality talent. Period. Quality talent has been in demand even during the pandemic. If you need ten different skills from an individual to deliver a particular job, you rarely get people having eight out of the ten skills, and if you do, you just hire that person. But such a person is not there so you always settle for somebody who has at least five or six skills. Therefore, a talent that has ten on ten skills is a myth. We have to train talent for the rest of the skills.

Can you tell us about LTTS’ training program where you hire and groom the talent or develop talent internally?

There are two schools of thought on training. One says, I want to buy talent when I need it and another school of thought says, I want to build talent to make sure that it is available whenever the business needs it. LTTS belongs to the second school of thought. We believe in investing in talent, developing talent, and building talent from within. We would like to take the option of buying talent from the market only when it is absolutely necessary. If we are venturing into a new business or new line of technologies where we don’t have that skill or expertise, then we look for talent in the market. But otherwise, we believe in building talent rather than buying it.

This is due to two reasons. Firstly, it is more economical. Secondly, internal talent understands the culture of the company and how things get done better in the organisation. But quite often when we don’t find the right talent ready, only then do we step out to hire right.

“There are two schools of thought on training. One says, I want to buy talent when I need it and another school of thought says, I want to build talent to make sure that it is available whenever the business needs it. LTTS belongs to the second school of thought. LTTS belongs to the second school of thought. We believe in investing in talent, developing talent, and building talent from within.”

When we talk about talent training, there is also the skilling part. As companies had to digitise their operations in the last one year, how did skilling and upskilling needs evolved? Are there any new skill sets that you have observed that have emerged in the sector?

One of the best things that we did at LTTS before the pandemic hit was to build a global virtual engineering academy for imparting training to employees working remotely from different locations. The academy is fully staffed with a Director, Dean, and full-time faculty who are teaching students in the colleges but come over to our side of the table where they create a customised curriculum for our requirements. Since they know what is being taught in the universities, therefore skilling for talent has become seamless.

Some of the latest skills that we are looking at are, AI/ML, 5G, and sustainability which are all buzzwords in the IT industry. So there’s a lot of emphasis and investment in building technical skills and capabilities in the organisation. We hired more than 2000 people for the current year and we’ll hire maybe another 1000 people in the next quarter. Fresher hiring is so high that we could not have engaged with new joinees with a high-quality skill announcement program if we did not have a global engineering academy. Technology makes it seamless to scale and deliver the same program for people in different parts of India and globally as well.

How is the ‘back to office’ playing out at LTTS? 

We are an engineering services company. We are not a typical IT services company. We have a lot of labs and R&D centers in our offices. Laptops are not enough to do the kind of work we do. We need high-end desktops or machines which are capable of doing high-end work. We tried to create miniature labs and move them to home, but by and large, we expect most of our employees to come at least once or twice a week to the office to have better access to our servers.

From an Indian context, almost 1/3 of our employees are coming to the office and more than 50 percent of employees in smaller locations like Mysore and Baroda are already back in the office. A significant portion of our employees are fully vaccinated, so we are expecting that as we move into the Q4 quarter, the numbers will further increase.

I also see that the work from home or work from anywhere model which was more experimental in nature before the pandemic is becoming mainstream. But I still think that it will take quite a while before a significant number of employees will remotely work. Right now, I think people see the virtue of working in teams in the office.

Can you tell us a little bit about the career guidance program initiated by LTTS where you mentor the children of your employees?

We at LTTS are really happy that we were able to do this program at the peak of the pandemic. Our managers had to deal with a plethora of employee issues like bandwidth issues, connectivity issues, laptop issues, software issues, etc while working remotely. They were also dealing with their personal problems at home, especially their children’s career issues. So we founded this career guidance organisation called ‘Mentoria’ and we branded a program under it named ‘Future Powerhouse’.

Through this program, we try to engage students from an early age – 9th and 10th standard. We want to start positioning LTTS as a top brand in the minds of young people while they’re at school. It’s a thought that’s been in the organisation for the last few years.

When the pandemic happened, I had the opportunity of rolling out this program for our employee’s children. More than 200+ children have gone through this program. Typically 90 to 120 minutes sessions with expert counsellors have opened up a whole vista of opportunities for young minds.

Is there a lot of reverse migration also happening? 

Having worked for the last three decades in the industry, I can say that talent migration is a one-way process. One-way process means people from other industries coming in. But once they leave the industry, very rarely they will come back. People from retail, hospitals, pharma, banking, insurance, etc with some exposure to IT join the IT services business and after learning new skills for a while, they go back to their respective fields.