Staffing: IT firms bank on buddy system

As a cost-cutting measure, IT-BPO firms are now emphasising on internal reference or 'buddy system' for recruiting employees.

Companies say it helps them save on consultant fees and reduces the recruitment life cycle.

Companies pay consultants close to 20 per cent of the annual package of a person provided by them as their fee, while incentives paid to the company's employees for bringing a candidate is a paltry sum in comparison.

For instance, Tech Mahindra has been leveraging the buddy system for the last few years. L K Bhatia, vice-president (resource management group), Tech Mahindra, says "The buddy systems has become all the more important in the current scenario." Internal reference becomes more important when it comes to senior-level hiring or lateral hiring as the company can be confident about the acquisition and the person's retention. Moreover, senior-level hirings come at a higher cost. "Around 80 per cent of our hiring at senior levels happen through internal references," he says.

Rajan Kanagasabai, global head, HR sourcing, Satyam Computer Services, says: "Irrespective of the slowdown and current business scenario, we have always looked at increasing our internal referrals. It serves as a platform for our associates to earn additional rewards and recognition within the organisation, while it also contributes towards cost savings. Almost 35-40 per cent of our recruitment is targeted through internal referrals."

Besides the cost-savings motive, companies believe the buddy system gets them the right person who is in sync with the culture of the company which becomes more significant in turbulent times. N Chandrashekharan, vice-president (corporate affairs) of Take Solutions, says: "In the current scenario, naturally leveraging internal reference system becomes more important. Though, it's not only because of the cost factor. Internal reference system helps in getting a qualitative person who is already aware of the culture of the company."

Vikram V Kallianpur, director-HR of software services provider Virtusa, says: "It has proven to be one of the most cost effective means of attracting quality talent."

Adds Arun Rao, VP-HR, AppLabs: "Yes, companies have cost factor associated with internal reference. We are relying more on recruitment through job portals. It helps reducing per head acquisition cost to merely few hundred rupees. Only 10 per cent of our hiring happens through consultants."

Some, however, believe that "buddiness" can tamper with the working culture of the company and despite the cost-savings factor attached to it, it may not be a good approach. Suresh Kamat, chairman and managing director, Laser Soft Infosystems, says: "During a downturn, internal reference becomes more important. But we don't encourage the trend because an employee may refer a person on the basis of his friendship with that person, which may not ensure the company the best candidate."