Margin pressure: IT firms hire interns

Even as the hunt for 'employable' talent continues, IT-BPO firms are increasingly hiring interns to maintain costs as their margins come under pressure due to a US slowdown and lag in firming up deals.

Take for instance, the case of India's second largest IT services provider, Infosys Technologies. This year, the company's training cost touched over Rs 700 crore. To tackle this it plans to get more and more interns (students who are in their final year of education) to work with the firm.

These interns will undergo a five-week training programme, followed by 12 weeks of project work. By the time the intern joins the company, the student is "billable".

The company insists there are no reductions in training time or costs since it still continues to invest in such interns both in terms of time and cost. However, experts feel that for the training period and project period the company will be paying just about Rs 4,000, (along with free accommodation) which is much lower than the salary it would have to pay for freshers who join as employees.

"Interns get the benefit of a hands-on experience with us and become familiar with the work culture at Infosys before they start work with us. This initiative also helps students by providing them with an opportunity to work on live projects which they can use for their final year project submissions," says Nandita Gurjar, V-P and group head (HRD), Infosys Technologies. For next year, the company plans offering internships to at least 1,000 students. 
 

AUSTERITY MEASURES
Company	FY09 total hiring	Campus hiring FY09
TCS	30,000-35,000	22,451
Infosys	25,000	18,000
Wipro*	82,122 (net addition of 2,290 employees for Q4)	16,000 (FY08)
Satyam	15,000	50-60% campus hiring
* Wipro does not provide guidance on hiring. These numbers are for the year ended March 31, 2008.

Analysts opine that such measures are necessary for the services industry as unlike in other industries there is no trend of apprenticeship in the sector. "Of late, companies are seriously taking this opportunity as informal way of evaluating students for talent. But from an industry point of view I welcome this initiative as services sector will introduce the concept of apprentice. More so when the overall placement numbers have shown a dip," explains Pandya Rajan, MD, Ma Foi India.

Monisha Advani, MD, Randstad India "" an HR consultancy firm "" believes that hiring interns controls salary costs but that saving gets diffused in enhanced training costs as interns require a higher level of preparation. But it might help in attrition.

"Corporate enterprises persistently recognize hiring interns to be the best way to influence retention and tenure with fresh, inexperienced talent. There is sense in this approach. Even if 40 per cent retention is effected over a 1000 day start, which is the average tenure of operations talent, this beats generic attrition levels," says Advani.

Besides saving costs and understanding the culture of the company, having interns allows the firms to zero in on the best talent. In the case of TCS, that seems to be the norm. Through its ACE programme, the company gives an opportunity to global students to understand the company better. ACE was launched in 2004. So far 83 foreign interns have undergone ACE and 25 are currently undergoing this programme.

Says Ajoyendra Muherjee, vice-president head global-human resources, TCS: "This is not all we offer internships to students who have been offered jobs by TCS. In the last two fiscals 2,059 people (these include foreign interns through the Global AIP programme) have successfully completed internships with TCS.