The relationship and disconnect between business and projects

In an interview a few years back for a project management role, the interviewer asked me what project management was. I was taken aback a bit. First of all that’s too generic a question to ask an experienced candidate. Second, project management is such a vast area that it is not possible to explain in a minute or so what it is unless I were to record and playback what is known as industry standard definitions. So I replied that project management is the management of execution of business strategies. The interviewer looked lost for a moment and for a very good reason.

The evolution of the IT industry has created mayhem and consternation in the understanding of business and projects. The mid section of the IT industry has swelled up with managers and is bursting at it’s seams. The hierarchy and designations are complicated and ridiculous. Even more confusing are designations that are total mismatches to the roles. I have worked with the designation of Senior Consultant and the role had got absolutely nothing to do with consulting. Then there are companies with Project Manager designation but the role would be as an individual contributor. What would make sense is that a project would have a team and the manager of the project would also manage the team. The designation of Business Analyst is even more bewildering. Fundamental requirements are to have in-depth knowledge of some software applications.

In one of the case studies during my MBA program I had read about a company whose founder and CEO had approached a venture capitalist (VC) for investment. After due diligence, one of the conditions put forward by the VC was to appoint a new CEO for the company. The founder refused and walked away. Six months later, he came back to the VC and agreed. The VC had wanted him to focus on the products and services his company was offering and let someone else handle the business and financial aspects. So every company has a top management team that walks, talks and breathes only business and money.  It is here that business strategies get created with the objective of better financial outcomes.

I use a simple analogy when talking about business strategies. If I get stamped on my foot, my foot doesn’t cry. The sound comes from my mouth. Similarly if there is a problem in business the red bulb may not necessarily be flashing from the problem area. This is why understanding the business problem is so crucial. Business problem could also be a new venture for the company without proper understanding of moving ahead. Digging deeper into the business problem has direct impact on the quality of business strategy development. But having the best business strategy amounts to nothing without taking action on it and execution of business strategy is a different beast altogether.

One critical aspect of having different functions inside organizations comes into focus during execution of business strategies. The business strategy could have a strategy for the sales team which in turn could result in a strategy for the finance team and so on. Once strategies for different functions are established, then comes their execution. It could be as minimal as a small change without any consequences. But where there are financial outcomes then there would be accompanying risks as well. This is where the whole premise of project kicks in. So projects are essentially execution of business strategies with the objective to create positive financial outcomes. The execution of a business strategy can be broadly visualized as a change management program with several projects managed and executed within its boundaries.

Every project is intended to create a positive financial outcome so I visualize every project manager as having a small cloud of money over his/her head. A senior manager who manages several project managers would then be having an accumulated bigger money cloud over his/her head. Scale this up and the CEO will have the biggest money cloud over his/her head. The divide between creation and execution of business strategies has given rise to the concept of outsourcing. MNCs develop the entire premise of projects before shipping out to their factories and back offices where the projects are executed to create products and services.

Better understanding of business strategies and organizational requirements has a direct bearing on project management. But project managers usually do not get their sights that far and are not expected to stretch their understanding beyond the boundaries of their projects. This is why I believe projects either fail or project outcomes do not result in positive business outcomes. Outsourcing has only complicated and compromised the purpose of projects. A project manager in another corner of the world may not have any idea about the intended outcomes of the business strategies which has given rise to the project he/she is managing. Early in my career I had to resolve a problem with an IT application of a client and according to the SLA with the client I had 3 hours, so I worked on other more important issues. When I finally reported the resolution, the client’s staff lamented about how their work was stuck and the amount of business they lost in those 3 hours. Poor understanding of client’s business environment and requirements coupled with poorer understanding and communication were the reasons.

The relevance and importance of projects and project managers should never be undervalued. In India business degrees are not required to manage and execute projects. This in itself shows the disconnect between business strategies and projects. This is why the growth of project managers gets restricted to the project and program management levels and very few get to break into the top management. This can be observed from how companies hire for executive level positions from other companies rather than their own employees growing through the ranks into those positions.

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Employee layoff is organizational consolidation

Layoff is probably the most feared, vile and despised word in the corporate sector. It has synonyms such as getting fired, terminated and getting the pink slip. There is plenty of misconception flying around presently about how IT companies in India are being perceived as abandoning their employees and are dumping them out.

There is an organizational level word for layoff: consolidation. Everything in our world works on the principle of sinusoidal wave. What goes up has to come down and vice versa. When there is more work companies need more people so it is natural that when work becomes less, companies wouldn’t need a lot of people. Up-sizing and downsizing are cyclical processes followed in every organization. IT is an industry that is particularly vulnerable to this. The entire IT industry thrives on the simple concept that all IT environments can be improved continuously and that is how IT service companies get increasing revenues every year. IT product companies make their bread and butter through software support and licenses. When companies decide to consolidate, the first mantra they adopt is the age old “Don’t fix what ain’t broken” and they apply this first to their IT environment. Companies do consolidation of their environment from time to time and cutting back on employee numbers during this time is not unusual.

There are important reasons why IT companies in India are gearing up to lay off a significant amount of their work force. One, IT companies hire many people anticipating more work to come in the near future and keep them on what is called as bench. A significant bench size is a huge liability for the company because these people are consuming money without generating any money so they are either assigned to whatever projects company gets or are let go from the company. The skill sets and aspirations of people who are assigned to projects may not be in line with the work in the project, so over time the number of unhappy employees increases. These employees have to be either retrained and absorbed into more relevant projects or let go from the company. So two levels of layoffs happen at the base of the corporate pyramid.

Then we get to the middle of the pyramid, the layer of the managers. When more people are hired, more managers are required so what can companies do with managers when people are being let go? Now there are two types of managers in every organization. The ones who join as lateral hires and ones who grow through the ranks of the organization. Where do managers grow from there? The pyramid narrows as we try to ascend it. It’s not just the underperforming managers but the best ones are also at the risk of being let go, for the simple reason that there is no scope for growth in the present organization so they are asked to look for growth elsewhere.

Letting people go is a very painful process, especially when it comes to employees who have been working for companies for many years and even decades. This is why I believe IT industry in India is jinxed and cursed in a way because thousands of people abroad have believed that their jobs were forcefully taken away and given to Indians. Companies avoid letting people go as much as they can unless they are pushed against the wall and are struggling for existence or they find specific reasons to lay off someone. I came across an audio clip recently in which an employee in one of the previous organizations I worked with has recorded her conversation with the HR. She was on bench for 7 months and finally she was assigned to a project in a different location than her current one. She hesitated and asked for more time to search for other opportunities. All companies require their employees to work from different locations if found necessary and it is made as a clause in employee offer letters. That employee had her family in her current location and it was very evident why she hesitated to move out. Irony is, she would have had lapped up the offer if she had been assigned to a foreign location rather than to another location within India. The best way out I believe is to quit the job rather than create a hassle about it. So companies already have built in a way of laying off employees in the offer letters itself if required.

Companies fire people only in extreme circumstances such as sexual harassment, financial irregularities, etc. Then there are companies that put the additional clause of handing the fate of the employees to their managers by giving them the right of termination in the employee offer letters. Being part of the corporate world is no easy game and we have to be well aware of all factors that can possibly affect us to the point of taking away our jobs. But I don’t see all badly about companies letting people go. The company I mentioned above at one point in time was letting go of people from one building while hiring for the same positions albeit lesser numbers and possibly lesser pay in another building. The Indian IT industry is only shelving up to 15% of it’s workforce which means companies are ready to gamble with the majority 85% which I believe is a huge number and there is no need to panic. I believe layoff is the constant reminder to everyone to retrain themselves continuously and keep themselves relevant enough to continue being part of the industry.

 

 

Is the “Trump”et about to burst the Indian IT bubble?

When Mr. Trump blew his war horn on the outsourcing of jobs from the US, I believe it did not send any major tremors through the market and certainly did not surprise me one bit. I saw this coming way back in 2010 and the fact that it took 6 more years is quite a wonder. It wouldn’t be of any surprise to me either if the accumulated resentment of losing local jobs to foreign professionals start rearing it’s face in the coming times. It is easy to blame Mr. Trump but it is the same resentment that drove people to vote him to power and he has to uphold his poll promise to protect the job interests of fellow Americans.

India has been the chief recipient of most of the IT jobs from the US. In fact, US IT jobs have become the monopoly of Indian MNCs. Not only have these companies set up shops all over the US and are fiercely competing with one another, on the fringe, body shopping companies have sprung up in thousands that hire people and contract out to other companies. This has resulted in Indians swamping the US job market in every possible ways. The US themselves needs to take blame for creating this situation. For the jobs that Indians have been lapping up, a similarly skilled American worker costs 4-5 times what an Indian gets payed. The difference in currency value between the USD and the Indian Rupee has been the biggest reason why outsourcing to India went into overdrive. After recession brought the world market down on it’s knees in 2008 and the supposed turnaround never materialized, it was quite evident that Americans would want to have those jobs back at any cost someday. Just commonsense and matter of time.

Add to this has been the blatant misuse of US work visas by the Indian MNCs. The work visas were designed with the interests of the US MNCs in mind. The objective was to do “brain drain” from India, get the best talents from India and move them to the US with the promise of lucrative jobs, big money and the fancy American lifestyle. The strategy worked big time till the Indian MNCs and contractor companies entered the fray. It was through them that Indian workers started flooding the US market. The strategy of hiring the best Indian talent got lost in the melee. At its zenith, employing people using visas defying the US labour laws and using forged documents and fake experience to get jobs in the US were the common norm. Work permit requirements keep increasing exponentially but visa utilization has been decreasing significantly, primarily because the overhead cost of Indian visa holders who travel to the US are made to be borne by the clients and post the meltdown of 2008, clients are increasingly wary of bearing any additional or unwanted costs. Moreover with the advancement in technology, even knowledge transfer is possible over mediums like Skype. I had thought of joining the exodus to the US briefly, but the main reason that held me back was I did not want to get lost in the midst of average and below average workers and the scamsters.

All of this outsourcing frenzy created a bubble in India called the IT industry. It was the next big thing when I was finishing my engineering and got sucked into the gold rush. When I got into the first outsourced project, it looked a little crazy because after working in IT datacenters, it is difficult to understand how the same work could be done remotely. But lots of work, more money, there were enough reasons to enamor and entice people. It took me a while to remember that all that glitters is not gold. Long hours of work started taking it’s toll on my health. I realized that in the long run, I would have to spend a lot more money on my health that what I was earning. Then, it was the same as driving through heavy traffic. Growth became stagnant and even a crawl became possible only with begging, fighting and most importantly by getting into the good books of the managers and bosses. To top this off there is a huge hidden trap. Get married then take housing loans to buy apartments, car loans and every other possible types of loans, then keep going in circles for the next 20-30 years to pay off the debts. People end up being slaves to the banks and to their jobs and strangle themselves with the debts. Companies are aware of this and treat employees with disdain by paying demeaning salaries and making them do irrelevant jobs which negatively impacts their careers.

Lastly, there is a big underlying problem with the IT industry. IT is another business enabler, just like finance, sales, marketing and other aspects of an organization. The key differentiation is in the fact that IT can be used to improve the functionality of every other aspect of organizations. Financial softwares, CRMs, etc are examples. But IT was never intended to grow beyond the business needs of clients and become an independent industry and it never did. Indian MNCs quickly learned to make more money by extending project timelines and by thrusting improvements and new features to existing software applications and IT infrastructure on to the psyche and budget of clients. The strategy worked but every time a client goes into consolidation mode, spending on IT is the first investment to be stopped. After 2008, this has become increasingly pronounced.

Identifying business problems are like getting kicked on the shin. The shin hurts but the mouth cries out in pain. Business problems require smart, quick and effective solutions. IT cannot solve all business problems but that is how it has been made out to be. IT professionals believe they know how to solve business problems but they invariably speak the language of IT and think in terms of IT. This is what a life in IT does to people. I saw through this early but even after doing MBA, I am finding that some of the IT connections are still wired and are alive in my brain. One of the case studies I learned during MBA was about IT major Infosys trying to foresee their future. One of the strategies they came up with was to invest their huge cash reserve into India’s infrastructure. But ultimately, they chose not to and decided to focus on their existing clients and finding more clients from abroad. For me, this is akin to owning a farmland, not working on it, expecting to find work on the neighbour’s farmland and live off it my whole life. Times change and change is the only constant in the midst of all the chaos of the cosmos. Everyone questioned my logic in leaving the “lucrative” IT industry in 2010 to take up MBA. It has taken 6 years but none other than the President of the United States has answered to my detractors. Not bad at all. Is the Indian IT bubble about to go poof? Only time will tell, but one thing is for sure. Nothing lasts forever and what goes up has to come down sometime. Business needs will be perpetual but IT needs may wane because after all, the sum is always greater than the individual parts.

Outsourcing – in a spin

It was supposed to be the new order of doing business. It delivered what it promised and much more. 3 decades after it changed the landscape of world business and the lives of billions of people, it is on the path of self destruction. This is about the life and times of outsourcing.

It all started when the world was firmly divided into three categories, developed, developing and poor countries. That was the time when the developed world was blooming in prosperity and opportunities in business and jobs were available in plenty. In the early 80s, China opened it’s market to the world albeit with a lot of caution. The developed world saw a vast pool of Chinese workers and came up with the idea of moving manufacturing to China to lower their operating costs. This is how outsourcing truly started. But they grossly underestimated the business acumen of Chinese people. During my MBA program in Shanghai, I read plenty of case studies about how entrepreneurship developed in China because of truly enterprising minds. One of the requirements to outsource work to China was to transfer technology as well and the developed world duly agreed, without having the vision to understand the long term consequences. Chinese entrepreneurs jumped into the fray and took pains to invest in new businesses they had no idea about. Indigenous products took over Chinese market, gained momentum and started pushing brands from developed countries out of China. Now Chinese products have a lion’s share of the markets around the globe. Apple continues to manufacture iPhones in China, but take a stroll through the streets of Shanghai and you will find people walking up to you and asking if you want to buy an iPhone. You have to know enough to make out the differences between the real and the fake ones.

Outsourcing reached the shores of India in the form of IT. It was first proposed to start the IT parks in the state (Kerala) I belong to, but the ruling state communist party rejected it (for reasons they only know). That’s how Bangalore got to grab it all. Most of the IT parks now stand on lands that were paddy fields not so long ago. And what did it do to the city? Bangalore was a pristine place and a honeymoon location with a summer temperature of 17-18 degrees. Now there are hardly any trees, summer temperatures have doubled, real estate prices are unreal and the city is struggling with a burgeoning population. IT outsourcing had it’s most profound influence on Indian education system. There was a time when IT was the only way forward no matter what people’s educational background was. And what work was getting outsourced? Government projects need security clearence so they cannot be outsourced, R&D projects need the right facilities so they cannot be outsourced, then there is work that companies do not want to outsource. So what gets outsourced eventually is work that local people wouldn’t want to do and companies can get the work done by paying a 5th of what they would have to pay locally. The scenario has changed completely, post 2008. Every time a company faces trouble, it’s IT they paralyze first. When all of the western economies went down in a heap, new work trickled and came to a stop. Indian IT companies continue to make a windfall with revenues, but that’s only because of faltering Indian economy and currency. Now, to stabilize western markets and create jobs, reverse sourcing of jobs has started. Big Indian IT companies had the opportunity to invest in India and develop the Indian market, but they chose to remain dependent on the inflow of foreign currency which is going to wane and trickle down with time.

Outsourcing has had it’s positive impact on the world. It has torn down the gap between developed and developing countries considerably. From the time when China was the main supplier of workers for manufacturing western goods, today China has bought the largest number of US treasury bonds. IT has brought a diverse India closer and fuelled development across the country. But along the way, outsourcing did lose it’s relevance. Outsourcing was about cutting cost when it started off and that thought never changed or evolved with time. People who worked on outsourced projects became skilled workers with time, by learning new technologies, by following standard processes and procedures and by improving their communication skills. A large pool of talent got created, but I am yet to see a company that projects it’s people as it’s true strength more than it’s ability to cut costs for the clients. Industry says people switch companies for money or they change companies to change their managers, but I believe the truth is that people do not get the value or the appreciation they deserve and all they can find solace is in seeking more money. Companies have always sought to use outsourcing as a tool to cut costs and now companies are having to reverse source just to create jobs in their homelands, even though the local employees may not be as skilled as the people who were working through the outsourcing companies.

Too much has been outsourced for it to be culled completely. But outsourcing has definitely lost it’s sheen and shine and is fast losing relevance in the face of a world that is rearranging itself post 2008. Outsourcing has spread to other south east asian countries. Bangalore is still the Silicon valley of the East, but it is no longer the womb where all outsourced work comes to life. Companies are increasingly choosing to retain their corporate office in Bangalore and spread execution of work to second tier cities across India. The eastern side of China has developed significantly and is as good as any developed country. Now development is rapidly expanding to other parts of the country. So China will no longer will be a preferred destination for outsourcing in the coming years. I believe outsourcing has to evolve from a cost cutting to a quality seeking venture, to stay relevant, especially when the arena for business duels is the whole world and no longer countries or continents. Businesses do not need to cut cost on everything and outsourcing can be used as a great way to show how spending can be optimized. Changing laws of governments, evolving needs of people, dynamic and unpredictable nature of business environment, all adds to the complexity and here is where outsourcing will rise up again or go down eventually.