Source: sify.com

Bangalore: After streamlining its internal recruitment process, Bangalore-based IT consulting firm MindTree Ltd plans to add consulting in recruitment process outsourcing (RPO) to its existing service offerings.

“Although we have implemented RPO at MindTree for just about a year now and we are still in a pilot phase, we are confident that we have enough expertise to offer this as a niche consulting service to clients,” says Sanjay Shelvankar, Vice-President, Talent Acquisition, MindTree Ltd.

Though IT companies routinely advocate business process management, technology adoption and outsourcing to their clients, they lag behind in adopting the same internally, especially in the recruitment process, according to him.

MindTree’s Talent Acquisition division has designed and put in place an RPO that is scalable and can overcome the inefficiencies of the current recruiting system. The model also increases accountability towards results, reduce the cost per hire and effort per hire, says Shelvankar.

In 2007-08, for instance, MindTree hired 1,300 laterals, but had 60,000 people showing interest to join the company with over 165 vendors sending resumes for the jobs. With the industry’s track record of 15-18 per cent hit ratio, the IT company’s recruitment division had to grapple with risks such as wrong hires, delayed hires, no-shows and the associated costs with these.

MindTree now has an RPO vendor on premise working on contracts that are risk-reward types with payments tied to outcomes. “In fact, our cost per hire has now reduced from Rs 57,000 to Rs 41,000 after the RPO implementation,” he says.

With this experience, MindTree intends to offer consulting in the area for the IT industry and has identified a couple of ‘competent RPO providers’. Shelvankar says the company would initially tap MNCs with captive centres in India for the consulting business.

According to industry estimates, the current RPO market is around Rs 10,000 crore in India with HR companies offering RPO as one of their services.

Source: economictimes.indiatimes.com

BANGALORE: Struggling British banks accepting a government bailout package will cut IT spending by up to a fifth and face pressure to move their offshore call centres in India and other countries back home, a UK-based research firm said.

British banks such as Barclays, Lloyds TSB and Royal Bank of Scotland (RBS), which have accepted government cash to recapitalise, will halt spending on technology until the second quarter of 2009 and even cancel their offshore outsourcing programmes in pursuit of low-risk models, TowerGroup said. Such developments will be extremely bad news for India’s software vendors, for whom the UK is a key market.

According to industry estimates, India exported around $6 billion (Rs 29,000 crore) worth of software and BPO services to the UK during year-ended March 2008, accounting for some 15% of the country’s total software exports.

Lloyds has outsourcing deals with top Indian software vendors Wipro and Satyam Computer Services, while RBS counts among Infosys Technologies’ clients. Furthermore, both Barclays and RBS have captive offshore centres in India.

“National interest may result in the UK banks bringing their call centres back to Britain,” TowerGroup European research director Bob McDowall told ET.

“Banks which have substantial government shareholding will have to consider carefully not only the financial impact, but shareholder reaction if outsourcing and offshoring result in job losses in the UK,” he added. Out of a $792 billion bailout plan for the financial services sector, the British government is setting aside $79 billion to buy stakes in stricken banks.

The partial nationalisation is seen putting pressure on the banks to cut IT spending and reevaluate their offshore outsourcing plans. “One could see a reduction in overall IT spend in the financial services sector of 15-20% in 2009 compared with 2008,” Mr McDowall said. The financial crisis and the worsening economic situation are also triggering rate cuts for all new IT contracts being signed in the UK.

Many UK banks have asked their IT suppliers to take a rate cut of almost 12%. According to the Association of Technology Staffing Companies, hourly rates for IT projects in the UK have fallen to around $69, from $79 in the last quarter of 2007.

“The 12% slump is primarily due to new contracts being signed at lower rates rather than renegotiated deals,” a statement by the association said.

A situation akin to that in the UK might also develop in the US, spelling further trouble for Indian IT companies. The world’s largest economy is implementing a $700 billion financial bailout package of its own and accounts for nearly 60% of software exports from India. “There is already a noticeable freezing of spending on IT development, including suspension of non-critical projects (in the US),” Mr McDowall said.